Do the self-employed get a pension?

If you’re self-employed, you may not have the luxury of a workplace pension through an auto-enrolment scheme. However, you are still eligible to claim the state pension and have your own, independent personal pension set up.

Self-Employed Pension

State pension

If you’re self-employed you’re entitled to the State Pension in the same way as anyone else.

The new flat-rate State Pension was introduced in 2016 and is based entirely on your National Insurance record. For the current tax year (2020/21) the maximum value of the new State Pension is £175.20 per week.

To be eligible to claim you must have at least 10 ‘qualifying years’, which essentially means years you were working or claiming benefits that qualified for National Insurance Contributions. To get the full state pension amount you’ll need to have 35 qualifying years. 

To find out how much you have built up and when you’re able to claim you can get a State Pension statement on the gov.uk site. You can also get more information on how to increase your qualifying years, if they need a boost. 

For many, living on a weekly income of £175.20 won’t be enough to support the standard of living you may want later in life. This is why it may be a good idea for you to make other arrangements, such as taking out your own private pension, to fund your retirement lifestyle.

Workplace pensions

You may also have built up some pension savings in old workplace pensions through your old employer.

Auto-enrolment

From 2012, employers were required to set up pensions for their employees who were over 22, earning over £10,000 and classified as a ‘worker’. 

If you’re unsure if you have any old workplace pensions or the total amount of these pots, then it may be worth tracking down these plans to see what they could provide for you in retirement. If you’re not sure where to start with tracking down your old pensions, then you can find more details here.

The amount of pension you receive and the method in which you can claim it may differ depending on the type of pension scheme your employer enrolled you in. 

Personal pensions for the self-employed

Sadly, there’s no such thing as Auto-enrolment for the self-employed. But by setting up a personal pension you can still benefit from the incentives the government have put in place to boost pension savings. Personal pensions are a very tax-efficient vehicle for long-term saving. The government incentivise people to pay into pensions by adding a 25% tax bonus on top of their contributions. For example, if you contributed £100 the government will add £25.

And, when you decide to retire or reduce your working hours, you’ll also be able to withdraw any savings you’ve built up. There are a number of different ways you’ll be able to claim your pension at retirement and you’ll be able to choose how and when you do this. 

Set up a personal pension with Penfold

Penfold is the online pension built for the self-employed. Our pension is built to be completely flexible around your needs: top up, change and pause your payments at any time, and anywhere in just a few taps.

We already help thousands of self-employed people everyday gain full control over their finances by providing the right support and tools to track down pots, make tax efficient decisions and ultimately set up a brighter future.

Set up your personal pension with Penfold today in just 5 minutes. Start saving with Penfold, and stop working sooner. 

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