Pensions for the self-employed

Do I need a pension if I'm self-employed?

Employees are usually automatically enrolled in a workplace pension scheme when they start a new job, with contributions coming from their salary as well as from their employer.

But if you're self-employed, the responsibility for setting up a pension and paying into it is all on you. 

This makes it even more important to prioritise your retirement savings. But the Social Market Foundation estimates that as of mid-2025, around only 20% of self-employed people in the UK have a private pension. 

Without any dedicated retirement savings you'll be reliant on the state pension, which by itself is unlikely to be enough for a comfortable retirement. 

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What type of pension should I get if I'm self-employed?

Anyone can open a personal pension - also known as a defined contribution pension. 

The money you pay in will be invested, and the amount you end up with will depend on how these investments have performed, as well as how much you've paid in and how you choose to access your money. 

When choosing a personal pension, remember to check the fees you'll be paying to the provider. If you already have a workplace pension with a previous employer, you might decide to continue paying into this, rather than setting up a separate pension. 

If you do not actively choose where to invest your contributions, your money will be placed into the pension provider's default investment fund.

If you want more investment choice and more control over how your money is invested, consider opening a self-invested personal pension (Sipp).

• Find out more: best Sipps 2026 

Lifetime Isas

Lifetime Isas are not pensions, but can be used to help you save for your retirement. 

You can pay in a maximum of £4,000 a year, which can grow tax-free - and you'll also benefit from a 25% government bonus (equivalent to the pension tax relief available for a basic-rate taxpayer).

The money isn’t taxed when you take it out, but if you access it before the age of 60 (or don't use it to buy your first home), you'll incur a penalty charge equivalent to 25% of the amount you withdraw.

• Find out more: Lifetime Isas vs pensions

Will I get tax relief on pension contributions if I'm self-employed?

Everyone gets tax relief on pension contributions. 

If you're a sole trader, the government will add tax relief to your contributions at the basic rate (20%). If you're a higher-rate or additional-rate taxpayer, you can claim a higher rate of tax relief via self-assessment.

If you run your business as a limited company, not only will you get tax relief on your contributions, but any contributions made via your company are deductible from your corporation tax bill. 

• Find out more: pension tax relief explained

How much can I pay into a pension if I'm self-employed?

The maximum you can save into your pensions each tax year before you have to pay tax is £60,000.

This amount, known as the annual allowance, includes tax relief and applies to all pension pots you might have (not per pension).

If you don't use your full allowance in a given tax year, you can carry it forward. This rule can prove particularly useful for self-employed workers wanting to put more money into their pension in a good year for their business.

It allows you to make use of any unused annual allowance from the previous three tax years up to a limit of £160,000 (£40,000 for 2022-23 plus £60,000 each for 2023-24 and 2024-25). Then you can add this year’s allowance for a maximum contribution of £220,000.

You’ll need to have sufficient earnings in the current year and have been a member of a registered pension scheme for each year you want to carry forward.

• Find out more: how the pensions annual allowance works

How much should I pay into a pension?

Employees who are enrolled into their workplace pension scheme must pay in a minimum of 5% of their earnings, with a minimum of 3% coming from their employer - giving a total contribution of 8%.

If you're self-employed, you won't benefit from employer contributions, so if you wanted to match this contribution level, the full 8% would need to come from you. 

Because your income is less predictable than for employees, you might it harder to commit to a monthly pension contribution - but try to get into the habit if you can.

If you do have to stop your contributions, try to restart them as soon as possible - and pay in extra when you can afford to. 

• Find out more: how much will I need to retire?

Will I get the state pension if I'm self-employed?

Like everyone else, self-employed workers are entitled to the state pension when they reach state pension age, provided they have made at least 10 years' worth of National Insurance contributions (known as 'qualifying years'). 

To receive the full state pension – worth £230.25 a week (£11,976 a year) in 2025-26 – you need to have 35 qualifying years on your record.

If you have gaps in your record, you have the option to pay voluntary National Insurance contributions to fill them. If you're self-employed, it's cheaper to top up your state pension as you'll pay voluntary Class 2 contributions, rather than Class 3. 

• Find out more: should I top up my state pension?