A guide to pensions if you’re self-employed 

A pension is designed to give you money to live off so you can stop working when you’re older, including if you need to retire early due to poor health.   

If you’re self-employed, you can set up your own defined contribution pension. This means the amount it will pay you depends on: 

• how much you pay in 
• how well your invested money grows 
• the fees and charges you’ll pay 
• how and when you choose to take the money. 

The earliest you can usually take money from a pension is age 55 (57 after April 2028), unless you’re retiring early due to ill-health or your scheme lists an earlier age.

Most pension schemes are designed for you to take the money after age 65, as you usually get more if you wait. 

You can typically choose to take your pension as: 

• one or more lump sums, with up to 25% tax-free 
• a regular income, including a guaranteed option for life  
• income as and when you need it.  

You can claim the State Pension if you’re self-employed, have an employer or don’t work – it all works the same way. 

How much State Pension you’ll get depends on your National Insurance record when you reach your State Pension ageOpens in a new window

You can check your State Pension forecastOpens in a new window on GOV.UK to see how much State Pension you’re on track to get. 

You usually need at least: 

• 35 qualifying years to receive the full amount 
• ten qualifying years to get anything.  

You’ll get an amount in between if you have 11 to 34 years of qualifying contributions.  

If you’re self-employed, qualifying National Insurance contributions are usually made: 

• as part of your Self-Assessment tax return  
• using National Insurance creditsOpens in a new window if you receive certain benefits like Child Benefit and Universal Credit. 

By itself, the State Pension is unlikely to give you enough money for a comfortable retirement – even if you qualify for the maximum amount. You’ll also need to wait until your State Pension ageOpens in a new window to claim it. 

Starting your own pension means you’ll normally: 

• have more money to live off in retirement 
• be able to take your pension anytime from age 55 (57 from April 2028) 
• get an income if you need to retire early due to ill-health. 

Many pension providers will let you choose how much you pay in and how often – like a regular amount or one-off payments as and when. 

If you pay into a pension, the government usually adds a top-up payment called tax relief. This is the money you’d normally pay in Income Tax.  

Most pensions you can start yourself will claim tax relief automatically for you, at a fixed rate of 20%. This means a £100 contribution into your pension will cost you £80. 

If you pay Income Tax at a higher rate than 20%, you can claim the extra tax relief by contacting HMRCOpens in a new window or completing a tax return. If you pay Income Tax at 40%, this means a £100 pension contribution will cost you £60. 

Each tax year until you're 75, you can usually get tax relief on all your pension contributions provided: 

• you don’t pay in more than you earn and 
• all payments in are less than the annual allowance – £60,000 for most.  

A pension typically grows faster than other types of savings or investments as tax relief boosts your contributions. Plus, fees and charges are generally lower than other investment products. 

But as the money is locked away until you’re at least 55 (57 after April 2028), it’s a good idea to have other savings you can access.  

For more information, see our saving and investment guides.

If you’re self-employed, how much your pension will pay you largely depends on how much you pay in and how much is added from investment growth. 

This usually means you’ll have more money in retirement if you can save over the longest period possible. 

Our Pension calculator can work out an estimate of your retirement income, including how much you might need and how it might change if you save more.    

Example: If you save £200 into a pension each month, at age 65 your pot could be worth around:  

• £158,000 if you start at age 20  
• £112,000 if you start at age 30  
• £73,000 if you start at age 40  
• £40,000 if you start at age 50. 

If you’re self-employed, you’ll need to choose a pension provider and product yourself. This is called a personal or private pension. 

Many personal pension schemes are run by insurance companies, banks or building societies.

You can also consider the government-backed NestOpens in a new window (National Employment Savings Trust). 

The main differences are: 

• the fees they charge 
• the minimum and maximum you can save 
• your options for investing your money. 

For step-by-step help, including the different types and how much you should save, see our guide Choosing a pension yourself.

If you run a limited company or partnership, you have the option of setting up a small self-administered scheme (SSAS) for you, your employees and family members. 

Up to 11 people can usually join, who will also act as the scheme trustees. This means you can collectively decide how to invest the money in your SSAS, including the option to buy your business property and company shares.

For more information, see our guide SSAS pensions: small self-administered schemes explained.

There are many fake investment opportunities designed to steal your pension money. They often do this by promising very high returns or using branding of real firms.   

Never join a pension scheme or invest your money after a cold call, email or text – or if you feel under any pressure. It’s very likely to be a scam and you might lose your money.   

A financial adviser can recommend a pension scheme and tell you the best way to save for your retirement, including how to invest your money.   

Our tool can help you find a retirement adviser or see our guide Choosing a financial adviser for more information.