The Best Pension Schemes For Freelancers

Posted November 6, 2017

When you’re self-employed, saving into a pension can be more difficult than it is for those that are in employment.

Some of the characteristics of being self-employed, including no employer contributions and irregular income patterns, mean it can be a challenge to save.

Pensions are crucial though if you are going to be well prepared for your retirement.

Read on to find out the best types of pension schemes for freelancers.

The State Pension

When you are self-employed you are still entitled to the State Pension in the same way as anyone else, and there is now a flat rate State Pension which is based entirely on your National Insurance record. While the State Pension is good, it is unlikely to provide you with enough income to maintain the standard of living that you would like, so it will be necessary for you to plan how you will provide yourself with the rest of the retirement income that you will need.

How To Best Save For Retirement

In the UK at present, there are 4.5 million people self-employed and this number is rising all the time. Despite this, the number of people who are saving into a pension has halved. By 2018, all employers will have to have a workplace pension scheme in place for their employees and be paying contributions into it to boost the amount that people are saving for their retirement.

What Kind of Pension You Can Use

Most people that are self-employed will be saving into a personal pension, which allows you to choose where you want your contributions to be invested from a range of funds that are offered by the provider. There are three types of different personal pensions that you can choose to pay into:

Ordinary Personal Pensions

These are offered by most large providers.

Stakeholder Pensions

This type of pension has a maximum charge that is capped at 1.5% and you can stop and start premiums without penalty.

Self-invested Personal Pensions

Which have a wider range of investment options, but usually higher charges.

You will need to decide on your own which type of pension is best for you, but remember that the earlier you begin saving into a pension, the better it is for you in the long run. It will give you more time to contribute to your savings before retirement and will also mean you have more time to benefit from tax relief.

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