Self-employed people three times more likely to not have a pension – what you need to know

People who have spent most of their working life as self-employed are three times more likely not to have a private pension, according to new research by the Department for Work and Pensions (DWP).

This comes as research from financial services firm Fidelity found that the majority of self-employed higher earners aren't saving into a pension.

Here, we explain what you need to know about pensions for the self-employed and hear from a Which? member about how they saved for retirement while self-employed.

Saving for retirement a challenge for the self-employed

The National Child Development Study follows the lives of 17,415 babies born in 1958. Its recent survey, carried out on behalf of the DWP, included pensions. It found that only seven in 10 of those who were mostly self-employed had at least one private pension, compared with nine in 10 of those who were employed for most of their working life.

Separate research from retirement savings provider PensionBee found that a lack of clarity around how pensions work may be preventing people from saving for retirement.

Nearly three quarters of people were unaware that self-employed pension contributions receive tax relief, according to its survey of 1,000 self-employed workers without a pension.

Fluctuating earnings can also make it more difficult to contribute to a pension. Four in 10 cited irregular income as the biggest barrier to retirement saving in PensionBee’s survey.

• Find out more: pensions for the self-employed

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The tax benefits of paying into a pension

Unlike employees, as a self-employed worker, you won’t be automatically enrolled into a workplace scheme, and you don’t receive an additional boost from employer contributions.

However, like anyone else, when you save into a pension you’ll receive tax relief based on the highest rate of income tax you pay.

If you’re a basic rate taxpayer, this means you'll be able to boost your pension by £100 for every £80 you contribute.

A Freedom of Information request by investment platform Fidelity found that six in 10 higher-rate taxpayers and half of additional-rate taxpayers aren't paying into a pension.

But tax relief offers an even bigger boost for higher earners: if you’re a higher-rate or additional-rate taxpayer, you only need to save £60 and £55 respectively to contribute £100 to your pension.

If you’re a director of a limited company, saving into your pension via your company can help maximise your retirement savings: pensions contributions can be offset against your company’s corporation tax bill, and won’t be subject to National Insurance and income tax.

• Find out more: ​pension tax relief explained

How I saved for retirement

Which? member Alan Lewin was self-employed as a Chartered Accountant for nearly 30 years. During this time, he regularly paid into a personal pension, which was managed by a financial adviser.

‘I’m risk-averse, so personally, there was always that incentive to prepare for retirement,’ he said. 

But as a director of a limited company, Alan was further motivated to save into his pension. ‘Any surplus income from the business went into my pension pot and I’m feeling the benefit now I’m retired,’ Alan told us.

These days, Alan has plenty of time to focus on the things he enjoys – volunteering at his local heritage railway, playing the oboe and looking after his grandchildren – but his years of experience as an accountant still come in useful.

‘We drew up a budget based on what we needed – sorry, boring accountant! – and worked with our financial adviser to work out how much we could regularly draw down from our pensions without decreasing the capital too much,’ Alan said. ‘I leave the rest invested and check on it every month to see how the investments are doing.'

Pension options if you’re self-employed

Personal pensions

If you’re self-employed, you won’t automatically be enrolled into a workplace scheme, but you can open your own personal pension. The earliest you can access this money is 55 (rising to 57 in 2028).

When comparing providers, pay attention to fees and charges, available investment options, and whether there are minimum and maximum contribution limits.

If you’d like more control over how your money is invested, you can open a self-invested personal pension (Sipp).

• Find out more: best Sipps 2026

State pension

As long as you have at least 10 years' worth of National Insurance contributions (NICs), you’ll be entitled to the state pension when you reach state pension age. To get the full amount (£241.30 a week in 2026-27), you'll need 35 years' worth of NICs.

Most self-employed people pay NICs through self-assessment, but you can buy voluntary contributions if you have gaps in your record. 

The state pension alone is unlikely to cover your living costs, so it’s a good idea to start saving into a personal pension as well if you can.

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

Isas

Isas aren’t pensions – but they can be a useful way to save flexibly for retirement.

You can save up to £20,000 per year tax-free in an Isa, either as cash or in an investment account. From April 2027, those under 65 will be able to save up to £12,000 in a cash Isa.

Unlike a pension, you can withdraw your money at any time, making it a good option if you want to start saving for retirement but may need to access your savings before then. 

• Find out more: best cash Isas

Lifetime Isas

Lifetime Isas (Lisas) were designed to help people save for their first home or retirement. You can open one if you’re aged between 18 and 39, and can pay in up to £4,000 per year until you turn 50 (this counts towards your total Isa allowance). If you use a Lisa to save for retirement, you won’t be able to withdraw the money until you turn 60.

You’ll receive a 25% government bonus on money saved into a Lisa, which can boost your savings by up to £1,000 per year.

LISAs can be a good option if you’re self-employed and a basic-rate taxpayer, as the 25% bonus is equivalent to the pension tax relief you’d receive, and you won’t be taxed on withdrawals.

• Find out more: Isas vs pensions

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