What is the best pension if you are self-employed?

Are you self-employed and exploring the possibility of starting a personal pension plan? If so, this is a wise decision. A pension can alleviate fears of an uncertain future, providing you with financial security as you enter retirement. However, there’s plenty to consider before going forward, including which is the best pension type for your situation.

What is the best pension if you are self-employed?

Self-employed individuals have access to personal pension options. While you can go with a standard personal pension, a self-invested personal pension (SIPP) could be a way to design your pension planning around you.

For the uninitiated, a SIPP isn’t too dissimilar from a normal personal pension. You are still saving and investing money into a pot that will go towards your retirement plans, and this will gain compound interest over time. The biggest difference with a SIPP, however, is the added control and flexibility you are given.

With this control and flexibility, SIPPs allow you to select and manage your pension investments. Investment opportunities include company shares, investment trusts, commercial property and land, and collective investments. These can be changed as often as you want, as can your pension contributions.

The benefits of a SIPP for the self-employed

As mentioned above, a SIPP supplies you with a larger degree of flexibility and control. However, why is this important for those that are self-employed? Here’s why it is beneficial, along with other advantages for this pension type:

Contribute when it suits

As you will know, being self-employed typically doesn’t provide a steady wage like regular employment. Some weeks can be lucrative, whereas others can be lean. Because of this, you can be hesitant to have too many fixed payments – such as a regular personal pension.

This isn’t the situation with a SIPP. You have full control over not just how much money you save, but also how often you contribute to your pension. You can stick to a normal monthly schedule, or you might opt to pay lump sums as and when you have the funds to do so. Plus, if you have a particularly fruitful month working, you could increase your contributions. This is the ideal situation with pensions for the self-employed.

Choose where and how your money is invested

With a standard workplace pension, this is normally dictated by others, and they make contributions on your behalf. With a SIPP, you have full choice over investments, where you’re free to add and change these as you see fit.

Whether you want to play it safe, be adventurous, or land somewhere in between, the option is yours when investing through a SIPP.

Low fees

Those with a SIPP can profit from low fees that won’t take away much from their contributions. These fees can include the likes of set-up charges and annual administration charges.

Of course, the fees are dependent on the SIPP provider you choose. At iSIPP, we always aim to reduce these fees as much as possible, and that is why we offer a competitive annual fee across our funds. We also help you to consolidate any existing pensions, saving you money on additional fees by keeping everything in one pot.

Easy online pension management

When it comes to self-employed pensions where you are taking the initiative, you want a solution that is easy to use and manage. That is what you get with iSIPP. Our platform has been built with simplicity firmly in mind.

With iSIPP, you can easily manage all of your pensions in one place. You can login to your account whenever and wherever you want, allowing you to do everything from make a new transfer, set up contributions, or to check on your current investments.

You might also be interested in:

Pension contributions for the self-employed

Does paying into a pension reduce tax for the self-employed?

Self-employed three times more likely to not pay into pensions

Disclaimer 

The content of this article is for general information purposes only and should not be construed as legal, financial or taxation advice. You should not rely on the information contained in this article as legal, financial or taxation advice. The content of this article is based on information currently available to us, and the current laws in force in the UK. The content does not take account of individual circumstances and may not reflect recent changes in the law since the date it was created. It is essential that detailed financial and tax advice should be sought in both jurisdictions and any legal advice, if required.

This notice cannot disclose all the risks associated with the products we make available to you. When making your own investment decisions it is important you understand that all investments can fall as well as rise in value and it is possible you may get back less than what you have paid in. You should also be satisfied that any investments you choose are suitable for you in the light of your circumstances and financial position. You should seek financial advice if you are not sure of what’s best for your situation.