If you’ve been working and living in the UK, you’ve surely envisioned your life after retirement.
Ensuring a good quality of life post-retirement involves having a pension as one of your essential sources of income.
It’s crucial that if you’re not already enrolled in a pension scheme, you should consider and select an appropriate option as soon as possible.
Why Contribute to a Pension?
Individuals who are self-employed tend to have fewer options for pension plans compared to regular employees.
In fact, there are distinct advantages to choosing and regularly contributing to your own pension plan.
On one hand, your contributions can benefit from tax relief, and you can enjoy retirement benefits similar to those of salaried workers.
On the other hand, you have the freedom to select different types of pension products since you’re the boss and not restricted by higher-ups.
Types of Pensions
Currently, there are various pension schemes and institutions available in the market, and our team suggests comparing them before making a decision.
Opting for the basic state pension requires you to pay the necessary National Insurance contributions.
Once you’ve contributed for 35 years, you can apply to start receiving your state pension.
Apart from that, you can also choose options like self-invested personal pensions (SIPPs) or government-backed NEST schemes.
Pension Assessment
Once you decide to participate in a pension scheme, you need to assess your individual situation.
If you opt for the basic state pension, calculating your contribution years and payments is necessary.
However, for investment-based pensions, you’ll take on a certain level of risk.
The earlier you plan to start withdrawing income from your pension, the lower the risk you should bear.
Choosing a Pension
When considering which pension plan to go for, you should align it with your individual taxable income level.
If you select the NEST pension plan, it’s relatively straightforward with lower flexibility.
In reality, simpler personal pension plans are more suitable for the majority of people.
For those with more complex financial situations, such as the self-employed or sole proprietors, SIPPs usually offer more flexibility and a wider range of investment choices, along with greater control.
Feel free to consult our team with any questions; we’ll be there to assist you promptly with your pension application.
