Pensions for IT contractors

As an IT contractor, have you ever thought about pensions and your future once you reach retirement age? While you are used to balancing the books as a contractor, it is easy to overlook the financial responsibility of managing your own pension. So what are the best pensions for IT contractors?

A workplace pension uses automatic enrolment, for instance. Regular employees can sit back and know contributions are being made to their pension schemes. Yet this isn’t the case for a contractor or someone that is self-employed. The impetus is on them to take control.

If you’re wondering what to do as an IT contractor, below is some helpful advice to keep in mind.

Pensions for IT contractors: what options are available?

If you make National Insurance contributions as an IT contractor for at least ten qualifying years, you will receive some form of State Pension. All workers are entitled to that form of pension. Yet even if you receive the full State Pension, it’s unlikely to provide enough money for you to enjoy retirement in financial comfort.

Other than that, an IT contractor is generally on their own when it comes to pensions.

In terms of pension options for contractors, there is one route that many take: a private pension. They will have to set up their own private pension and make their own contributions. That said, if you work as an IT contractor as part of an umbrella company, that umbrella company will make contributions to your pension (assuming you are enrolled as part of their scheme).

Whether an umbrella company is involved or not, private pensions for contractors make sense for numerous reasons.

The benefits of a private pension for an IT contractor

There are numerous advantages gained by an IT contractor that utilises a private pension. Aside from providing you with added income for your retirement, the money you contribute will be boosted in two ways. Firstly, you can earn compound interest on your pension pot. Secondly, an extra 20% is added to each contribution as tax relief. That percentage even goes up for those that go beyond the base tax rate.

Another big positive is the flexibility. With pensions for self-employed people and contractors, where work regularity can be infrequent, this added control is necessary. If you have a lean month or two, for example, you might want to lower or even avoid your pension contributions during this period.

The benefits of iSIPP for IT contractors

A private pension already delivers a number of positives. However, these can be multiplied when working with the right financial company. That’s where iSIPP enters the equation. With the combination of our expertise and innovative platform, you can take full control of your private pension.

First of all, if you have multiple pensions dotted around different places, we can help combine these into one pot. Pension consolidation is recommended. If you can avoid it, there’s no point in having different pensions tied up in different places. This causes confusion and eats up time trying to manage everything. With your pension in just one place, there is no confusion, and you gain greater control.

Speaking of control, you have an added level of flexibility and freedom to invest your pension as you wish. You are able to select different investment opportunities, whether it is a safe bet, a riskier gamble, or something in between.

As an IT professional, you understand the importance of technology-led solutions. We also know the importance. That is why we have made our iSIPP platform both feature-rich and simple to use. With this technology, you can monitor your pension whenever and wherever and make any adjustments if necessary.

You might also like:

Pension tax relief for self-employed and contractors

Pensions for the self-employed

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.

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