Pensions for the Self-Employed
No employer means no auto-enrolment and no matched contribution. Nobody does it for you.
If you are self-employed there is no employer contribution and no auto-enrolment, so you have to set up and fund a pension yourself. You still get tax relief on what you pay in.
Why the self-employed fall behind
There is no employer to enrol you and no employer contribution, so nothing happens unless you make it happen. Income that varies month to month makes a fixed monthly commitment feel risky, so it gets postponed.
What you can set up
A personal pension or a SIPP does the same job as a workplace scheme without the employer. A personal pension is simpler and cheaper for most people. A SIPP gives far more investment choice, which is valuable if you will use it and an unnecessary cost if you will not.
We are not pension advisers. We introduce you to one who is, and the introduction costs you nothing.
Tax relief when you are self-employed
You still get it. Contributions attract relief at your marginal rate, so a higher-rate taxpayer's £100 contribution costs £60 of take-home income. If you trade through a limited company, employer contributions from the company are usually more efficient again, because they reduce corporation tax and avoid National Insurance.
Paying in when income is uneven
Set a low regular contribution you can sustain in a bad month, then add lump sums after good ones. That beats a high monthly figure you cancel in the first quiet quarter. Carry forward means unused allowance from earlier years is often still available when you have a strong year.
Your National Insurance record still matters
The State Pension will be a meaningful part of your retirement income and it depends on your NI record. Self-employed people with low profits can end up with gaps without realising. Check your record, and if there are gaps, voluntary Class 2 contributions where you qualify are among the best value available.
A worked example: Uneven income, steady pension
Dan is a self-employed contractor whose income swings between quiet and busy quarters. He tried £400 a month, cancelled it during a slow spring, and did not restart for two years.\nHe now pays £120 a month, an amount he can sustain in the worst month he has had, and adds a lump sum after each strong quarter. Over three years he has contributed more than the £400 plan ever managed, because the low figure never triggered a cancellation.
Figures are illustrative and rounded, used to show how the rule works. Your own numbers will differ.
A second example: Company contribution instead of personal
Nadia takes a small salary and dividends from her limited company and has been paying into a pension personally out of taxed income.\nPaying the same amount as an employer contribution from the company instead reduces her corporation tax bill, avoids National Insurance, and is not restricted by her low salary in the way personal contributions can be. Same pension, meaningfully lower cost, purely from which side of the company the money leaves.
At a glance
| Option | Best suited to |
|---|---|
| Personal pension | Most self-employed people; simple and cheaper |
| SIPP | Those who will genuinely use the wider investment choice |
| Employer contribution from your own company | Limited company directors |
| Voluntary National Insurance | Anyone with gaps in their record |
Common mistakes
- Waiting for a good year that never quite arrives.
- Setting a monthly amount so high it gets cancelled in the first quiet quarter.
- Paying personally when a company contribution would be more efficient.
- Letting National Insurance gaps build up unnoticed.
We are introducers, not pension advisers. We put you in front of someone who is, and it costs you nothing.
What to do next, in order
- Set a low regular contribution you can sustain in a bad month.
- Add lump sums after good months rather than raising the regular figure.
- If you trade through a company, check whether employer contributions are more efficient.
- Check your National Insurance record once a year.
Key terms, in plain English
- Personal pension
- A pension you set up yourself, without an employer.
- SIPP
- A self-invested personal pension offering a far wider range of investments.
- Employer contribution
- A payment into a pension from a company, which for director-shareholders is often more tax-efficient than paying personally.
- Voluntary National Insurance
- Contributions you can pay to fill gaps in your record, usually Class 2 for some self-employed people or Class 3 for others.
- Annual allowance
- The cap on how much can go into your pensions each tax year with tax relief, counting your contributions, your employer's and tax relief together.
Who this affects most
This applies to everyone working for themselves, and most urgently to those who have been self-employed for more than five years without setting anything up. Limited company directors have the most to gain, because contributing through the company is usually significantly more efficient.
Check broadband before you make an offer
Broadband speeds can vary street by street, so check the exact address before you commit. Ofcom's free checker shows which broadband speeds and mobile coverage are available at any UK property.
Want all your bills in one?
We can introduce you to a specialist who can combine your mobile, broadband and utilities into one bill. There's no fee for the introduction.
We don't provide these services ourselves. Switching household bills is not a regulated financial service, so FCA protections and the Financial Ombudsman do not apply. We'll only pass your details to the specialist if you ask us to. See our privacy notice.
Common questions
Do the self-employed get a pension?
Only the State Pension automatically, and only if the National Insurance record supports it. There is no auto-enrolment and no employer contribution, so anything else you set up yourself.
What kind of pension should I set up?
A personal pension is simpler and cheaper for most people. A SIPP offers far wider investment choice, which is worth paying for only if you will actually use it.
Do I still get tax relief?
Yes, at your marginal rate. If you trade through a limited company, employer contributions from the company are usually more efficient again, reducing corporation tax and avoiding National Insurance.
How do I contribute when income varies?
Set a low regular amount you can sustain in a poor month and add lump sums after good ones. Carry forward often lets you use unused allowance from earlier years in a strong year.
Does my National Insurance record matter?
Very much. Low-profit self-employment can leave gaps without you noticing, and the State Pension will be a meaningful part of your retirement income. Check the record and consider voluntary contributions.
How much should I put in?
Whatever you can sustain in a poor month, topped up after good ones. Consistency matters more than the starting figure.
Can I still get tax relief with no employer?
Yes. Relief is given at your marginal rate on personal contributions, within the annual allowance and your earnings.
What if my income is very low some years?
You can still contribute a small amount and receive basic-rate relief up to a set limit even with little or no earnings. Check the current figure.
Where to check the official figures
Pension figures change every tax year. These are the free, official sources. Check the current number before you act on anything here.
- Check your State Pension forecast, GOV.UK
- Check your National Insurance record, GOV.UK
- Pension Tracing Service, GOV.UK
- MoneyHelper, pensions and retirement
- The FCA Register, check any firm
Where to go next
- Combining pensions: our main guide
- The NHS Pension Scheme explained
- The LGPS explained
- The Teachers’ Pension Scheme explained
The bottom line
Nobody enrols you and nobody matches your contributions, so a self-employed pension only exists if you build it. Set a low regular amount you could sustain in your worst month and add lump sums after the good ones, because the plan that survives is the one you never cancel. If you trade through a limited company, check whether contributing from the company rather than personally is more efficient, as it usually is. And check your National Insurance record once a year, because low-profit years leave gaps in a State Pension that will form a meaningful part of your retirement income.
Want someone to look at your actual pensions?
Tell us what you hold. We will introduce you to a regulated pension adviser who can tell you whether anything is worth moving. If it is not, they will say so.
Talk it through with usWhatsApp us
Open Monday to Saturday, 9am to 8pm
We do not provide pension advice and we are not pension advisers. We introduce you to a carefully selected, FCA-regulated pension adviser. The introduction costs you nothing. If you go ahead, we may be paid a fee by that firm. Pension rules and figures change, and what is right depends on your own circumstances.