Pensions for the Self-Employed: Where to Start

A pension is a financial account designed to help you grow a pot of money that you can use for income when you hit retirement age.

Many employees, have a workplace pension set up which they contribute to regularly as well as their employer.

However, if you’re self-employed, you’ll need to set up a self-invested personal pension (SIPP) and make contributions yourself.

Similarly with workplace pensions, you can usually access your SIPP or personal pension income from 55 (increasing to 57 in 2028).

Both SIPPs and personal pensions allow you to set money aside for retirement.

Generally speaking, a personal pension is managed on your behalf by the pension company.

SIPPs typically give you more control over managing how your pension is invested.

Putting money into a pension is essential to ensure that you have enough built up for a comfortable retirement.

Some of the other benefits include:

• Tax relief on your pension contributions

Paying into your pension can offer a tax-efficient way to invest your income. That’s because you usually get tax relief on the contributions you make.

The investment growth on your pension is also free from tax.

The table below shows how much extra money you could get from the government on top of your pension contributions under the 2026-27 tax year rules.

• Flexible pension contributions

SIPPs and personal pensions allow you to make contributions flexibly at a time that suits you.

You can choose to make regular payments or a one-off contribution.

It’s also possible to adjust how much you pay if your income changes. For instance, if your income falls, you might make a smaller contribution and if it rises, you might add more to your pension.

This helps you to continue contributing even if your earnings change from month to month.

• More control over your pension investments

Most SIPP providers allow you to have your pension investments professionally managed on your behalf.

That means someone else will be responsible for picking what your retirement fund invests in.

However, lots also offer you the option to select your own investments and build a portfolio for your retirement fund.

Some of the investments that SIPPs offer include:

Stocks and shares: give you partial ownership of a company.

Bonds: a type of loan for governments or companies that they have to pay back.

Funds: are collective investments that pool your money together with other people and are professionally managed on your behalf.

Ready-made portfolios: pre-selected funds which are bundled according to different strategies e.g. risk level.

The following steps can help you set up a SIPP or personal pension:

1. Shop around for a provider
Start by comparing different pension companies. That will help you find the best way to build up enough money for a comfortable retirement. To help you narrow down options, we’ve rounded up the best SIPP and personal pension providers.

2. Double-check fees
Fees cover the cost of managing your pension fund and making investments. They can eat into your returns. So it’s important to know what you’re paying before you open an account.

3. Review the investment choices
It’s always worth checking what investment options are available. For example, stocks, shares, bonds, funds and exchange-traded funds (ETFs).

4. Consider professional advice
An independent financial adviser could help you choose the best pension. They come at a cost though, so check the fees before considering this option.

5. Set up your account
Once you’ve decided which SIPP you want to open, register for an account and start making contributions to your pension.

SIPPs and personal pensions are safe so long as they are regulated by the FCA.

This means you’ll get compensation if your pension provider goes bust.

Under the Financial Services Compensation Scheme (FSCS), you’ll get:

• 100% of your pension money
• Up to £85,000, per firm if you have a SIPP

You can check if your pension is protected using the FSCS’s tool.