Pensions for the self-employed

If you work for yourself, no employer has a legal duty to set up a pension for you. Self-employed people are not automatically enrolled into a pension scheme, unlike eligible employees, whose employers must do this for them¹. The result shows in the numbers: over the past decade, pension scheme participation among the self-employed has stayed fairly stable at between 16% and 20%², compared with 88% of workers eligible for automatic enrolment³.

That does not mean you cannot save in a pension. It means the choice, and the paperwork, are yours. A personal pension is one you arrange yourself, and it is open to you whether you are a sole trader, a partner, or a company director paying yourself. You choose the provider, you decide how much goes in and when, and you can stop and start as your income changes. Alongside this, you still build towards a State Pension through your National Insurance record, and there are free, impartial services that can help you decide what to do.

Pension options when you work for yourself

Because there is no employer scheme behind you, the pensions open to a self-employed person are the ones you set up yourself. Official guidance is clear that a personal pension may be suitable if you are self-employed and do not have access to a workplace pension, if you are not working but can afford to pay into a pension, or if you simply want to save more for retirement⁴. Personal pensions are available from banks, building societies and life insurance companies⁶.

Within that broad category there are three practical routes, each covered in its own section below:

• A standard personal pension, where you pay in and the provider invests the money in its range of funds.
• A self-invested personal pension (SIPP), where you choose and manage the investments yourself.
• A stakeholder pension, a personal pension that must meet government standards on charges and flexibility.

Separately from any private saving, your State Pension depends on your National Insurance record. If you are self-employed you may need to pay Class 2 National Insurance contributions, which entitle you to the basic State Pension but not the additional State Pension⁶. The rules on the State Pension and your record are covered in your National Insurance record and the State Pension.

The scale of the gap is worth understanding. One analysis found the median pension assets of the self-employed peaked at £50,000 in those aged 60 to 64, with pension participation highest, at 37%, among the self-employed aged 40 to 49 and 50 to 59⁷. Earlier survey data showed 28% of self-employed people contributing to a private pension between July 2014 and June 2016⁸. The long-term trend matters because, unlike an employee, nobody is paying in alongside you.

Personal pensions: how they work for the self-employed

A personal pension is a pension you arrange yourself⁵. You choose the provider and decide how your contributions will be paid, and you might do this through an independent financial adviser⁹. Personal pensions are sometimes known as defined contribution or "money purchase" pensions: the pot is based on what you or your employer paid in, and what it grows to⁵. How these pots work is explained in defined contribution pensions explained.

For a self-employed person, the practical features are these:

• You set the amount and timing. This matters when income is irregular. You do not need to be retired from work to get your pension benefits⁴.
• Other people can pay in for you. Family members can pay a personal pension on your behalf⁴, which can help in lean months.
• Tax relief tops up what you pay. How relief works, and how to claim it, is covered in pension tax relief.
• Some employers offer personal pensions as workplace pensions⁵, which is relevant if you do occasional employed work alongside self-employment.

Finding a provider takes more legwork than in most areas of financial services. There are no comparison sites for personal pensions, so you either need to manually search and compare your options, or pay a financial adviser¹⁰. Personal pension schemes, including stakeholder pension schemes, are provided by insurance companies, banks and building societies¹¹. The page on personal pension and SIPP providers describes who operates in this market.

If you have had personal pensions in the past, perhaps from employed work, they still exist and still belong to you. The Pension Tracing Service can find details of a person's personal or workplace pension¹², and finding lost pensions explains how to use it.

SIPPs: choosing your own investments

A self-invested personal pension, or SIPP, allows you to hold multiple investments and products, so you can manage your pension fund yourself and have more control over where your money goes¹³. For a self-employed person who already manages their own business finances, that control can be appealing: you decide the holdings, and you are not limited to one provider's fund range. The detail of how these products work is in SIPPs: self-invested personal pensions explained.

Control has two costs attached. The first is charges: SIPPs often cost more than simpler pensions, and the fee structure can be hard to compare. The second is responsibility: the decisions, and the mistakes, are yours.

The complaint data shows where this can go wrong. The ombudsman's case studies include a complainant, Juhi, who transferred a pension into a SIPP and found the charging structure in the SIPP was considerably higher than her previous stakeholder pension plan¹⁴. Complaints about SIPPs are not new: as far back as 2009/2010 they accounted for 2% of investment and pension complaints handled by the ombudsman¹⁵.

If something does go wrong, there are two routes. The Pensions Ombudsman looks at complaints about the administration of personal and occupational pension schemes, and its remit covers personal pension plans, SIPPs, stakeholder pension schemes and several other arrangement types¹⁶. The Financial Ombudsman Service can also consider complaints about personal pensions⁹. Which route applies depends on who the complaint is against, and complaining about a pension provider explains this.

Stakeholder pensions

A stakeholder pension is a flexible personal pension⁴. What makes it different is that stakeholder pensions are personal pensions that have to meet certain government standards, designed to make them good value⁶. In practice those standards mean capped charges, lower minimum payments, fee-free transfers, and usually a range of investment funds¹⁰. The legal framework comes from the Stakeholder Pension Schemes Regulations 2000¹⁷.

The features that matter most to someone whose income moves around:

• Capped charges. The provider cannot charge beyond the level the standards allow¹⁰.
• Lower minimum payments. You do not need a large monthly commitment to start one¹⁰.
• Fee-free transfers. Moving the pot elsewhere does not cost you a transfer fee¹⁰.
• Governance. The pension must be run by independent trustees or auditors who are responsible for the pension meeting the legal requirements¹⁸.

Eligibility is broad. A stakeholder pension may suit you if you are self-employed without a workplace pension, not working but able to afford payments, saving on top of a workplace pension, or if your employer offers one¹⁸. Even if you have no form of paid employment, you can set up a stakeholder pension¹⁹. Providers include banks, building societies and insurance companies, and trade unions may also offer them to members¹⁸.

Two consumer protections are built into the sales process. When a firm sells a personal pension that is not an automatic enrolment scheme, its key features document must clearly and prominently explain that stakeholder pension schemes are generally available and might meet the client's needs as well as the scheme on offer²⁰. And the regulator's decision trees, designed to help people work through the choice, include a separate tree for self-employed people²¹. The Pensions Regulator also publishes a register of stakeholder schemes²¹. More detail is in stakeholder pensions explained.

Personal pension, SIPP or stakeholder: how each one compares

All three are defined contribution pensions: a pot based on what you or your employer paid in²². The differences are in who controls the investments, what the charges can be, and how flexible the payments are.

Who each tends to suit is a matter of circumstance rather than ranking. A stakeholder pension is designed for people with moderate earnings who think they will need to stop and start payments or vary the amount⁴, which fits many self-employed incomes. A SIPP suits someone who wants to choose their own investments and is comfortable with the charges and the responsibility that brings¹³. A standard personal pension sits between the two: more choice of provider and fund than a stakeholder must offer, but without the self-management of a SIPP.

One protection applies across all three. Under the FCA's compensation rules, a person is eligible to claim compensation where they are a trustee of a personal pension scheme or a stakeholder pension scheme that is not an occupational pension scheme²³. The comparison between the two most common types is drawn out further in personal pension vs stakeholder pension and SIPP or standard personal plan.

The minimum age for taking your pension is rising to 57

You can currently take a private pension, including some workplace pensions, from age 55, and this is increasing to age 57 from April 2028²⁴. The earliest age you can take a personal pension is usually 55, depending on your arrangements with the pension provider or pension trust⁴. You cannot usually take money from your pension scheme until you are at least 55, unless you are seriously ill²⁵.

The age has moved before. Since April 2010, the minimum age at which you can take your workplace or personal pension increased from 50 to 55 for most people⁶. The next step, to 57, takes effect on 6 April 2028²⁴.

Two points matter for a self-employed person planning around this date. First, you do not need to be retired from work to get your pension benefits⁴, and you can claim while working as long as you have reached the age agreed with your pension provider²⁷. Someone running their own business can therefore take pension money and keep trading. Second, the rise applies to pensions you already hold, not just new ones, so a plan built on access at 55 may need rethinking. Some older pensions include a protected pension age that can preserve an earlier access date, so it is worth asking your provider. The detail is in when can I access my private or workplace pension?, and taking money early because of ill health is covered in early retirement for ill health.

Value for money checks on pension schemes

Charges are the main thing that eats into a self-employed person's pension, because there is no employer contribution to offset them. The government has been tightening the rules on what pension schemes must demonstrate about their value. The Pension Schemes Bill 2024-25 includes a policy to require trustees of defined contribution schemes to report on the scheme's value for money²⁸, and The Pensions Regulator's recent work references reforms in the Pension Schemes Act, including provisions on guided retirement and value for money²⁹.

These duties sit mostly with workplace schemes, but they shape the personal pension market too, because providers operate across both. For someone choosing a personal pension, the practical equivalents are:

• Read the key features document, and check what it says about stakeholder alternatives²⁰.
• Compare charging structures, not just headline fund names. The ombudsman's case files include complaints where charges turned out considerably higher after a transfer¹⁴.
• Be alert to scams. The Pensions Regulator expects governing bodies to provide clear information on how to spot a scam in all relevant communications to members, including retirement wake-up packs and annual benefit statements³⁰. The warning signs are set out in pension scams.

Free help is available at the decision stage. If you are unsure that a personal pension is right for you, the Money and Pensions Service can be contacted for free advice⁴, and Pension Wise offers free guidance on your pension options²⁴. Neither costs anything, and neither sells products. The service is described in Pension Wise: free guidance on your pension options.

If a complaint is needed, the Pensions Ombudsman can look at complaints about the administration of personal and occupational pension schemes²⁸, and its coverage includes personal pension plans, SIPPs and stakeholder schemes¹⁶.

How salary sacrifice changes differ for employees and the self-employed

Salary sacrifice is an arrangement that only exists in employment: you agree to reduce your gross salary or sacrifice a bonus, and in return your employer pays the same amount into your pension³¹. In some cases this means you and your employer pay less tax and National Insurance³². A self-employed person has no employer to sacrifice salary to, so the mechanism is simply unavailable.

The government is changing how salary sacrifice for pension contributions is treated. As announced at Autumn Budget 2025, from April 2029 the amount exempt from National Insurance contributions will be capped at £2,000 a year³¹. The reform applies to employers and employees who operate or participate in Optional Remuneration Arrangements (OpRA) for pension contributions, and is expected to have a significant impact on 290,000 employers³³. It is estimated that 44% of employees using salary sacrifice for pensions would be impacted³³.

None of this changes what a self-employed person pays. The measure covers Class 1 National Insurance contributions only, for employer pension contributions under OpRA where arrangements exceed the limit³³. Employers do not pay NICs on pension contributions, but employees and self-employed people do¹. So the reform affects employed people whose arrangements exceed the cap, and the employers who run them, but not the self-employed, who were never able to use salary sacrifice in the first place. The mechanics are covered in salary sacrifice for pension contributions and salary sacrifice vs relief at source.

There is a live policy debate about helping the self-employed save. The Work and Pensions Committee has recommended trials of default saving for self-employed people, and a consultation on increasing the National Insurance paid by self-employed people, with the increase paid into a pension if the person also contributes 5% of their earnings³⁴. An earlier proposal along the same lines was a 3% increase to the Class 4 National Insurance main rate³. None of this is law yet, so the position today remains as described above: no automatic enrolment, no salary sacrifice, and a personal pension you arrange yourself.

Frequently asked questions

Can I get a pension if I am self-employed?

Yes. Nobody sets one up for you, because self-employed people are not part of automatic enrolment, but you can open a personal pension yourself at any time. A personal pension is one you arrange yourself, choosing the provider and how much you pay in. Stakeholder pensions and SIPPs are both types of personal pension. You also build towards a State Pension through your National Insurance record if you pay Class 2 contributions.

Is a SIPP a good option if I want to choose my own investments?

A SIPP lets you hold multiple investments and manage the pension fund yourself, so it suits people who want that control. The trade-off is cost and responsibility: the Financial Ombudsman has seen complaints where a SIPP's charging structure was considerably higher than the person's previous stakeholder pension, and SIPPs had the highest uphold rate in one year's complaint data, at 56%. If you are unsure, free guidance is available from the Money and Pensions Service.

What is the difference between a personal pension and a stakeholder pension?

A stakeholder pension is a type of personal pension, but one that must meet government standards designed to make it good value. Those standards mean capped charges, lower minimum payments and fee-free transfers. A standard personal pension has no such caps, so charges vary between providers. Stakeholder pensions must also be run by independent trustees or auditors responsible for the pension meeting the legal requirements.

When can I take money out of my pension if I am self-employed?

The earliest you can usually take a personal pension is age 55, and this rises to 57 from 6 April 2028. You do not need to have stopped working to take your pension benefits, and you can claim while still working as long as you have reached the age agreed with your provider. Different rules apply if you are seriously ill, where early access may be possible.

Will the rise in pension age to 57 affect a pension I already have?

The minimum age for taking most private pensions rises from 55 to 57 on 6 April 2028, and it applies to pensions you already hold as well as new ones. Some older pensions include a protected pension age, which can preserve an earlier access date, so check with your provider. This change is separate from State Pension age, which follows its own timetable.

Do the National Insurance changes to salary sacrifice affect self-employed people?

No, not directly. Salary sacrifice only exists where there is an employer: you give up part of your salary and the employer pays it into your pension. The reform taking effect from April 2029, which caps the National Insurance exemption at £2,000 a year, applies to Class 1 contributions under employer arrangements. Self-employed people pay their own National Insurance on pension contributions and cannot use salary sacrifice.