Pension Planning for Self-Employed Workers: What You Should Know

According to the Federation of Small Businesses, as of early 2024, there were 5.45 million small businesses in the UK (0–49 employees), with approximately 4.1 million of these having no employees. This highlights the scale of the self-employed population.

The number of self-employed individuals in the UK grew from 3.2 million in 2000 to a peak of 5 million in 2020. Although this has dipped slightly, around 4.2 million people remain self-employed in 2024, according to Statista.

Being self-employed brings the freedom and flexibility of working for yourself and the full responsibility of planning for the future. Unlike employed individuals, you don’t benefit from an auto-enrolled workplace pension or employer contributions. You must build your plan for retirement income and financial protection for your loved ones.

At Ifamax Wealth Management, we specialise in pension advice for self-employed professionals, including freelancers, contractors, and business owners. Here’s what you need to know to secure your financial future.

Why Pension Planning Is Essential When You're Self-Employed

Whether you’re newly self-employed or have been running your own business for years, it quickly becomes clear that you are solely responsible for funding your pension.

While the UK State Pension offers a foundation, it currently pays just £230.25 per week (as of April 2025) if you qualify for the full amount. That’s roughly £12,000 a year—not enough to maintain a comfortable lifestyle in retirement.

Taking control of your pension early can significantly improve your future options. Consider the following:

  • What pension pots do you already have? Should these be consolidated into a more cohesive strategy?

  • What are your retirement goals—your needs, wants, and aspirations?

  • Are you a higher-rate taxpayer? Pension contributions help reduce your tax bill.

  • What is the cost of delaying? Even a short delay in starting pension contributions can dramatically increase the amount you’ll need to save later.

Proactive retirement planning for self-employed individuals ensures you’re not left playing catch-up.

Pension Options When Being Self-Employed

Self Invested Personal Pension (SIPP)

A SIPP offers greater flexibility and investment choice. You can select from various assets, including shares, funds, ETFS, and even commercial property.

Benefits include:

  • Full control over how your pension grows

  • Broad investment selection

  • Ideal for experienced investors or those working with a financial adviser

Stakeholder Pension

These pensions are designed to be simple, accessible, and low-cost. They have:

  • Low minimum contribution requirements

  • Capped charges (usually at 1%)

  • Flexible terms for stopping and restarting contributions

They can be a great starting point for new savers or those with fluctuating income.

Personal Pension Plans (PPP)

Pension providers offer these and typically come with professionally managed portfolios. You can:

  • Contribute monthly or make lump-sum deposits

  • Receive tax relief from HMRC

  • Choose risk levels aligned with your goals

Each pension type supports flexible retirement planning with government-backed incentives such as tax relief on contributions.

How Much Should You Contribute?

This is the million-dollar question. Some reports suggest that you may need £500,000 or more to fund a comfortable retirement depending on your lifestyle expectations.

But there is no one-size-fits-all answer. The first step is to understand your situation:

  • What income will you need in retirement?

  • What existing savings or pension pots do you already have?

  • How many years do you have left to save?

A general rule of thumb is to aim for 12–15% of your yearly income, but a tailored financial plan is far more effective.

Seek Professional Financial Advice

With multiple options and variables to consider, working with a pension adviser can make a significant difference.

At Ifamax, we help self-employed individuals:

  • Select the right pension product.

  • Build an investment strategy based on risk profile and time horizon.

  • Maximise tax efficiency and government incentives.

  • Create a retirement plan that evolves as your business and lifestyle change.

We’ll work with you to design a bespoke plan that provides financial freedom and peace of mind so you can confidently focus on running your business.

Contact Ifamax Wealth Management today to take the first step toward a more secure retirement.

 

Risk warning

This article is distributed for educational purposes only and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy, or investment product. Reference to specific products is made only to help make educational points and does not constitute any form or recommendation or advice. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.

Ashton Chritchlow