Pension: self-employed people urged to consider ‘simple’ options to finance their retirement | Personal Finances | Finance

Despite more and more people working for themselves in recent years, HMRC reports show that only £ 830million was paid by the self-employed on personal pensions in fiscal year 2019/2020, up from 1 , £ 15 billion the year before, and the lowest on record. During an exclusive interview with, wealth manager Christine Ross discussed the drawbacks self-employed workers face due to lack of automatic enrollment.

She explained that it can be more difficult for freelancers because they are “starting from scratch”. There is no employer to put money into someone’s pension or to match their contributions.

However, Ms Ross also declared alternative pensions that people can choose to contribute to. Lesser-known vehicles may sometimes be better suited to the situation than other personal pensions available.

It is possible that some freelancers have difficulty paying their pensions due to a lack of knowledge of what exists, she suggested.

She said: “Those people who don’t have access to an employer-sponsored plan should probably benefit from a shareholder pension plan.

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“I don’t hear it as much now, but around 2001 the government put in place a standard for pensions that would have a limit on charges and they weren’t allowed to have bad penalties for anything. “

A shareholder pension is a type of defined contribution pension, which has a retirement value based on how much someone pays and how their investments have performed over time.

They are arranged by a contract between an individual and his pension fund and must meet strict government conditions.

Anyone can invest in a shareholder pension, whether they are a permanent job, self-employed or unemployed.


She continued, “When my clients tell me about their children who have just started saving for their retirement or are self-employed, or maybe they are in an employer plan, but they can’t contribute or there is no counterpart. available for them, I would say just get a very simple diagram to start.

“Maybe something with a follow-up fund, because all you have to do is get started, unless you have a genuine interest in the stock markets and are well informed.

“All you really need to do is invest some money in this program and make it grow.

“I would keep the price very low, very simple. It’s about starting somewhere and building something.

Any UK pension that people transfer to a shareholder’s pension should be accepted at no additional cost.

Stakeholder pension plans must have a minimum gross contribution of £ 20 or less, whether contributions are made regularly or on an ad hoc basis.

They must also offer flexibility, and people can stop or restart them at any time without incurring a penalty.

Also, if people don’t want to choose how their pension is invested, there must be a default fund available that they can invest in.

It should have a lifestyle option, which automatically shifts people’s money to low-risk investments as retirement approaches.

Ms Ross added: “As you build up funds or critical mass in your program, over time you might want to work with an advisor, maybe you have market knowledge yourself, they could. be appropriate to move to a scheme with more options.

“But for most people, it’s just a matter of putting money in the program first.”

Like all defined contribution pensions, people have the option of withdrawing funds from their shareholder’s pension from the age of 55 (57 from 2028).

People can take up to 25 percent as a tax-free lump sum and either withdraw the remaining 75 percent, use it to buy an annuity, keep it invested through withdrawal, or delay the withdrawal altogether.

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