Setting up a pension when you're self-employed is one of those things that ends up at the bottom of the to-do list indefinitely. When you made the jump from employment, someone else used to handle this. Now it's on you — and it's genuinely easy to just not get round to it.
This was me too. Here's what I wish someone had laid out clearly from the start.
Why you need to start now
When you're self-employed, there's no employer contributing on your behalf, no auto-enrolment nudging you in. Every year you delay is a year of compound growth you don't get back. Starting today with a modest contribution is significantly better than starting in five years with a larger one.
Your two main options
Personal pension (managed)
The provider invests your money for you. Minimal decisions required. Good for anyone who wants a hands-off approach or is just getting started.
Providers to look at: PensionBee (excellent for consolidating old pensions too), Nutmeg (robo-advised, easy to use — be aware of the fees).
Self-Invested Personal Pension (SIPP)
You choose where your money is invested — index funds, stocks, bonds. More control, more responsibility. Worth it if you want to understand where your money actually goes.
Providers to look at: Vanguard (low fees, great for index funds), Hargreaves Lansdown (wide range of options), AJ Bell Youinvest (good middle ground).
The tax case for acting now
Sole traders: Pension contributions attract 20% tax relief automatically. Every £80 you contribute becomes £100 in your pension. Higher rate taxpayers can claim an additional 20–25% via self-assessment.
Limited company directors: Pension contributions can be made as a business expense, reducing your corporation tax bill. This is genuinely one of the most tax-efficient things a limited company director can do. Each year, before the tax year ends, I work with my accountant to estimate corporation tax liability and make a pension contribution that offsets some of it.
Carry forward rule: If you've had years of low or no pension contributions, you may be able to use unused allowances from the previous three tax years. The annual allowance for 2024/25 is £60,000 (capped at your total earnings for the year).
Can you contribute during maternity leave?
Yes. Even if you're not earning, you can contribute up to £2,880 per year to a pension and the government tops it up to £3,600. If you operate through a limited company, your company can continue making contributions on your behalf.
How to start — without overthinking it
- Decide how hands-on you want to be (managed vs SIPP)
- Compare two or three providers on fees and ease of use
- Open an account — most take under 20 minutes online
- Set up a regular monthly contribution, however small
- Review once a year — increase contributions as income allows
Ready to get proper personalised advice on the right pension structure for your situation? Unbiased matches you with fully independent, regulated financial advisers.
Also on Femme Finance:
- SIPP: how does it work?
- How to use the pensions dashboard
- Freelancer financials: managing your money
Ready to talk to an actual human?
Femme Finance points you in the right direction — but sometimes you need personalised advice for your specific situation. Unbiased matches you with a fully independent, regulated financial adviser. Free to search, no obligation.
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