As of now, more and more people tend to start their own companies or start their own businesses or take the form of individual employment.

As the self-employment market grows, people are gradually leaving their workplaces.

This means that there are no longer organisations helping the self-employed decide on pension registration and payment.

Self-employed and sole traders are severely underrepresented when it comes to retirement savings, and it may be time to plan ahead for your retirement.

Pension Scheme

According to a study by the Institute of Self-Employed (IPSE) , less than one in three self-employed people currently pays a superannuation.

The remaining two-thirds would prefer to replace pensions with financial preparation or savings.

Since no employer offers a pension plan, the self-employed and sole traders have to take on and prepare for themselves.

In your opinion, the rules for contribution levels are complex.

Any accountant and tax advisor will give you advice, which will usually be sound planning and reduce your financial stress.


Pension Options

There is no single answer to your current pension options, it depends on your current situation and your plans for the future.

As the preferred state pension, you are entitled to receive it as long as you have paid the necessary state insurance premiums.

You need to have at least 35 years of NI contribution history to get a pension of £164.34 a week (as of now). Please refer to our previous article for the specific calculation method.

Not only that, but you may also need to plan additionally on top of the state pension. This includes self-invested personal pensions (SIPPs), government-funded NEST schemes, etc., applicable to private pension options.

When you are considering which superannuation scheme to choose, you should refer to the individual’s taxable income level.

Since pension options are very similar in terms of taxation, it depends on individual circumstances and attitudes towards risk.

If you have some previous knowledge of pension schemes, you may think that the NEST pension scheme is too simple and less flexible. In fact, simple individual pension plans are easier to meet most people’s needs.

Conversely, for sole traders or self-employed persons with more complex financial situations, SIPPs generally have more flexible and broad investment rights and more freedom of control.

In the end, no matter which superannuation plan you choose, we recommend that you take some time to think carefully before making your decision.