Pensions are often last on the list of things for freelancers to pay attention to. In the beginning, you’re more concerned with getting clients and making your business sustainable. If you do reach the stage where you’re working comfortably and have enough to save, then don’t overlook pensions.

It’s important that freelancers and other self-employed people consider their pension options before it’s too late. If you’re working solo, that means you’re no longer getting a workplace pension, although you may have contributions left from when you were an employee. You could potentially keep paying into that and if so, you need to get the details from your previous employer.

Why do people put pensions off?

The main top reason is that many people struggle to set aside money for a pension. This is why it’s so important to build a strong business and market it well so you have less uncertainty over your finances. Make sure you’re charging enough to cover the things you’re going to miss out on that ordinary employees have like pensions, holidays and sick days.

A lot of people put off pensions because it’s too distant to think about but also because a lot of people are relying on the idea of a state pension anyway. However, the state pension isn’t going to set you up for a life of luxury or relaxation. If you want to sustain your lifestyle as it is now, you’re going to have to pay in more.

Why you should be saving now

While it may be somewhere off in the distant future, experts advise everyone save independently for a pension as early as they can. Even employees with workplace pensions and full NI contributions are advised to in order to sustain their lifestyle past retirement.

Another reason to start saving now is that the state pension age is moving upwards and pensions have been subject to a lot of uncertainty recently.

Starting early gives you more time to contribute to your pension pot. This gives it more time to benefit from tax relief and for your savings to grow. So if you started saving £100 a month from the age of 25 you’d get more overall than if you paid £200 a month starting from the age of 35 because it’s got more time to grow.

How do freelancers save?

Many freelancers will divide up every bit of income they have and allocate it to different things. Around 30% already needs to be saved for tax and NI. Freelancers will often set aside another percentage just for pensions or other savings. Work out how much you can comfortably set aside and try to stick to it.

Different pension types, which is right for you?

So if you’re looking to start paying into a pension scheme, the next question is which type? There are a few options that will depend on your current circumstances.

Personal pensions

A personal pension is an ordinary pension that you contribute to and is available through most providers. Your pension provider will claim tax relief at a basic rate and add it to your pension pot. Along with this, it will grow with your contributions and investment returns.

Your fund is usually invested in stocks and shares which will then grow your fund over the years before you reach retirement.

Stakeholder pensions

They’re a type of personal pension that has more defined terms. They work with low, flexible contributions, capped charges and a default investment strategy. They’re good if you’re not after a lot of choice. You can choose where your investments go but if you don’t want to, they’ll follow the default investment strategy.

Self-invested pensions

These types of pensions work in a similar way to the personal ones except that they give you more control over where your funds are invested.

However, they do have higher charges associated with them compared to personal and stakeholder pensions. They’re usually more suited to larger funds and for those who have experience in investing.


The National Employment Savings Trust is the workplace pension scheme created by the government. It’s usually for those who are employed but some self-employed people are able to use it too.


Whatever you choose, it’s important to research your options and make sure you’ve got enough to put away on a regular basis if possible.

If you’re unsure about where to invest, some people pay an investment manager to handle all of the decisions for them. However, if you want to save money, you might be better off staying away from the self-invested pensions and going for one of the others instead.


Are you currently saving for a pension or have you been putting it off? What do you think the main barrier is stopping people from saving? Let us know your thoughts.


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