Self-employed and pensions: how a SIPP can help

Being self-employed offers flexibility and freedom, but it can also mean long hours with little external support. Whatever line of work you are in, you are also your own HR manager, IT helpdesk and administrator — all while juggling work and home life.

It is perhaps not surprising therefore that pensions often slip down the to-do list. This is certainly reflected in recent government figures that show that more than three million self-employed workers are not saving into a pension at all.¹

Employees are automatically enrolled into a workplace pension, but no such system exists for the self-employed. Instead, they must make a conscious effort to open a pension plan and, crucially, save into it on a regular basis.

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This is where a Self-Invested Personal Pension (SIPP) can help. These flexible pension wrappers can help the self-employed build their own retirement savings.

Although the self-employed don’t benefit from an employer’s contributions, SIPPs offer the same tax advantages as any other pension. Tax relief can be claimed at the saver’s marginal rate, which can be particularly valuable for higher- and additional-rate taxpayers — especially if they expect to fall into the basic-rate band once they stop earning.

As with other pensions, SIPPs allow people to take 25% of their pot as a tax-free lump sum from age 55 (up to a limit of £268,275), though the government is raising the minimum age to 57 from 2028 (for all pension plans, not just SIPPs).

Contribution flexibility

One of the advantages of SIPPs is that they can be opened with relatively small sums, and savers have the option to pay in lump sums as well as regular contributions.

This flexibility is vital for the self-employed, whose incomes can fluctuate month to month and year to year. Rather than commit to large regular payments, many prefer to make one-off contributions when cash flow allows — for example at the end of the tax year.

The Fidelity SIPP, for example, can be started with just a £20 monthly direct debit or a £1,000 lump sum, although savers are obviously free to pay in higher sums, up to the annual limit of £60,000 a year (or equivalent annual earnings if lower).

• Open a Fidelity SIPP

Investment strategy

Those who already invest in a stocks and shares ISA will find SIPPs familiar. They typically operate through an online platform, allowing savers to invest across a wide range of funds.

Fidelity’s SIPP offers access to more than 2,000 funds — spanning equities, bonds, cash, commodities and multi-asset portfolios, with both active and passive choices. This range of funds offers the option to invest globally across a range of different sectors, so savers can build a portfolio tailored to their risk appetite and time horizon.

For investors who already have a stocks and share ISA this choice will be familiar. Fidelity’s list of funds, for example largely mirrors that in its ISA. This also means investors can align — or deliberately diversify — their SIPP and ISA holdings. Some SIPP investors may want to take a slightly different investment strategy, depending on their time horizon and risk profile of their SIPP and ISA holdings.

For those who are daunted by the choice, Fidelity offers its ‘Select 50’ — a curated list of funds, chosen by Fidelity’s in-house experts. For many self-employed workers, it makes sense to utilise both ISA and SIPP wrappers, with ISAs offering more flexibility around access, but SIPPs offering the additional benefit of upfront tax relief on contributions.

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Popular fund choices

Current investor behaviour gives a snapshot of market sentiment and where many people’s concerns lie at present. Given the ongoing economic and political uncertainty, which has been magnified by President Trump’s on-off tariffs, it is perhaps not surprising that three cash funds appear in the top five funds bought this year through Fidelity’s SIPP. These include the Fidelity Cash Fund, Royal London Short Term Money Market Fund and Legal & General Cash Trust.

• Read: Top 10 best-selling ISA and SIPP funds this year

These funds aim to deliver cash-like returns by investing in money market instruments. As lower-risk, less volatile holdings, they appeal to cautious investors and those nearing retirement who want to protect gains. They can also play a defensive role in balanced portfolios during turbulent markets.

At the other end of the spectrum, some savers are still chasing growth. Two technology funds — Legal & General Global Technology Index Trust and Fidelity Global Technology Fund — are among the top picks, with holdings including Microsoft, Apple and Meta, alongside smaller tech innovators operating in markets across the globe.

There are also a number of broader global funds in this top 10: such as Fidelity Index World Fund and Rathbone Global Opportunities Fund. These offers broad diversification, with investments across a range of sectors, regions and individual companies.

Don't delay

Whatever investment strategy you choose, the key is not to put off getting started. The earlier you invest, the more time your money has to grow which will hopefully mean a larger pension pot by the time you retire.

One of the major benefits of self-employment is being your own boss. With a SIPP, you can take the same control over your long-term financial future.

More on self-employed pension options

If you’ve got a burning question you want to ask, why not drop us a line? Ask us your question.

• Read: What income might I get from a £250,000 pension?
• Read: ‘Mr 4% rule’ identifies the key risk for pension investors
• Read: Savings by age: how much should you have by 30, 40, 50 & 60?

Source:

¹ Gov.uk, 21 July 2025

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Overseas investments will be affected by movements in currency exchange rates. Direct shareholdings should generally form part of a well diversified portfolio of other investments. Select 50 is not a personal recommendation to buy or sell a fund. Eligibility to invest in an ISA or SIPP and tax treatment depends on personal circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of financial adviser or an authorised financial adviser of your choice.