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Self-employed? What you need to know

Important Information: The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. You cannot normally access money in a SIPP until age 55. This information and our guidance tools are not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

Working habits are changing, with a greater shift across all industries towards self-employment. Some 4.8 million people are now self-employed, compared to 3 million in the 1990s. And this looks set to keep increasing1. The average age of those making the leap to self-employment is 42, and the evidence from the jobs market suggests most are doing so because they choose to, not because they are forced into it because of a poor job market2.

Nearly half (46%) of those in their twenties say they have a second source of income apart from their main job (nowadays, often referred to as a ‘side hustle’), and over 1 in 5 of those their fifties3.

This greater freedom is to be celebrated, but it does mean those working for themselves have a greater responsibility for their own financial futures.

This came home to me on a recent day of filming, when we were working with a video production crew. Media work often involves teams of self-employed individuals coming together for a particular job. Between takes, one of the cameramen asked how he could kick-start his pension saving. It was clear that he was well aware of the need to save, and confessed to feeling increasingly concerned that he was not putting anything aside for his retirement, but was unsure where to start – and whether he had left things too late to be able to make a difference.

For people in a similar position, here’s what you need to know to get your retirement savings on track

1. It’s not too late

Even people who haven’t been saving into a pension after many years in work can make a huge difference to their retirement income. For example, if you’re 40 years old with nothing in a pension, you still have 25 years or more to save and let investment returns grow, thanks to increasing longevity.

But it is crucial to start saving, even if the amounts you put aside feel insignificant. You can set up a Self-Invested Personal Pension (SIPP) and contribute as little as £40 a month. That might not be enough to give you the retirement you want, but from that starting point you can accelerate your saving. By using a SIPP you can also reap the benefits of compounding: the process by which asset earnings from either capital gains or income are reinvested to generate additional earnings over time.

2. It might not cost as much as you think

Saving into a pension means you have to forgo money that you could otherwise spend, but tax relief on pension contributions means the sacrifice may be less than you think. To pay in a total of £1,000 to your SIPP, you would only need to contribute £800, and the Government would pay the other £200.

If you pay income tax at above the basic rate, you can claim even more tax relief through your tax return or by writing to HMRC.

You can find out more about tax relief and pension allowances here

3. Don’t be daunted by investment choices

If you’re self-employed, Fidelity’s SIPP might be a good option to consider. You choose what to invest in and can take an income when and how you like, normally after the age of 55. 

You can select how your money is invested, with a wide range of funds from leading providers, plus shares, investments trusts and ETFs. And whether you’re just starting out or an experienced investor, our easy to use investment selection tools can help you narrow down your selections and decide where to invest.

4. Keep an eye on your targets

Once you have a SIPP set up, with a regular contribution being made and investments chosen, you can focus on building your pot of money. Fidelity has a range of retirement calculators that allow you to work out how much you will need in retirement, and whether you’re on track.

Our retirement savings guidelines rules of thumb can also help you understand how much you’ll need to enjoy a retirement that meets your expectations, including what’s a sustainable withdrawal rate at retirement.

At first, it can seem like your target is a long way off but, once you know what you will need, you will be encouraged to increase your saving and accelerate your progress.

5. Consider consolidating old workplace pensions you may have

If you’ve not always worked for yourself, a SIPP can also make a good home for old workplace pensions you may have acquired in previous years.

The investments in more traditional workplace pensions can be more restricted than those in a modern SIPP, which give you a wide choice of investment options to help you get your money working harder. And it could be potentially cheaper if the fees of your new provider are less than you’re currently paying.

Bringing your pensions together in one place can help you take more control of your retirement savings, and when it comes time to retire, you can be sure you have the full range of options for accessing your money and can do so simply.

Visit our website for more information on self-employed pension options including State Pension eligibility and frequently asked questions.

Important Information: It’s important to understand that pension transfers are a complex area and may not be suitable for everyone. Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the benefits, charges and features offered. To find out what else you should consider before transferring, please read our transfer factsheet. If you are in any doubt whether a pension transfer is suitable for your circumstances, we strongly recommend that you seek advice from an authorised financial adviser.


1Office for National Statistics: UK trends in self-employment: Feb 2018
2CIPD Mega Trends Reports Jan 2018
3Teamspirit/Fidelity, Modern Life Report April 2018

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