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Self-employed and Pensions

Self-employed and Pensions: Work

Being self-employed, whether it is as a sole trader, a franchisee, or partner within a partnership, you are responsible for the success of your business.  You get to ‘be your own boss’ and work more flexibly, making direct decisions that impact your income and future work.  Depending on your industry, you may be able to command a much higher rate than the salary you’d be able to achieve as an employee.

For some self-employed workers, their business can be seen as a viable retirement plan but for others, there is potential that it could lose value depending on circumstances. If you’re self-employed, do you have an exit strategy from your business? Perhaps, you plan on selling the business/assets or planning to hire in management to carry on the business when you retire.  It is also possible that you plan to hand over your business to family members and receive an income from the profits?

Some people plan to keep working until their State Pension Age (SPA).  With SPAs going up is this something you could afford to do or would working for longer become more challenging as you get older, depending on the industry you’re in?  You should consider whether your pension or other savings could allow you to retire earlier than SPA or if this is something you would like to plan for.

If business is good and has been for a sustained period, now may be the right time to look at investing in yourself and your future.  While we might like to, reality is we can’t all work forever and it is important to think about planning for a life without work when you can afford to do so. 

Pensions are designed to support you and your financial goals in later life.  It may be that you have money in savings within the business that could be used as an employer contribution towards a pension plan.  Or, you may have money in personal savings, which you could consider paying into a pension. If you haven’t been able to save into a pension for a few years, it is possible to use carry forward rules to make up for this.

There are lots of things to consider when thinking about planning for later life and retirement; we have some other dedicated seld-employed pages which cover these. However, being self-employed offers great opportunities but can also pose challenges for retirement saving.

If you’d like further guidance for the self-employed and pension planning you can find out more how we can help here

 

Frequently asked...

Where can I find out more?

If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.

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