Jasmine Birtles
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Best Pensions for Self Employed People in the UK
Ruby Layram
14th Apr 2025
When you’re self-employed, you get to be your own boss- which is brilliant- but it also means you don’t get the workplace pension perks that come with a 9-to-5.
Planning for your retirement? That’s all on you.
The good news? You’ve got more freedom and flexibility than ever to shape your future on your terms.
Whether you’re just starting out or finally getting serious about your long-term finances, there are some fantastic pension options out there designed with self-employed folk in mind- complete with juicy tax perks, flexible contributions, and a wide range of investment choices.
Understanding Pension Options for the Self-Employed
As a self-employed individual, you have access to several types of pensions:
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Personal/Private Pensions: These are defined contribution pensions where you choose a provider and make regular or lump-sum contributions.
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Self-Invested Personal Pensions (SIPPs): A type of personal pension that offers a wider range of investment options and greater control over your pension pot.
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Stakeholder Pensions: Designed to be flexible and have capped charges, making them suitable for those with irregular income.
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National Employment Savings Trust (NEST): A government-backed pension scheme open to self-employed individuals, offering low charges and a range of investment options.
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Lifetime ISAs (LISAs): While not pensions per se, LISAs can be used for retirement savings, offering a 25% government bonus on contributions up to £4,000 annually.
Top 5 Pension Providers for the Self-Employed in the UK
I did a bit of digging to find the best pensions for self-employed people in the UK. Here are the 5 that made the top of my list!
| Provider | Type | Minimum Contribution | Fees | Key Features |
|---|---|---|---|---|
| PensionBee | Personal Pension | £0 | 0.50%–0.95% | Easy setup, combines old pensions, flexible contributions |
| Vanguard | SIPP | £500 | 0.15% | Low-cost funds, straightforward investment options |
| Nest | Personal Pension | £0 | 0.3% annual + 1.8% contribution charge | Government-backed, ethical fund options, suitable for irregular contributions |
| AJ Bell | SIPP | £0 | £10/month or 0.25% | Wide investment choice, online platform, suitable for active investors |
| Legal & General | Personal Pension | £0 | 0.25%–0.60% | Flexible contributions, automatic tax relief, range of investment funds |
Tips for Choosing the Right Pension
So, which pension should you choose? Here’s how to weigh up your options and make a confident decision!
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Assess your income: Choose a pension that allows flexible contributions if your income varies.
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Consider investment choices: If you prefer hands-on management, a SIPP might be suitable. For a hands-off approach, a personal pension with managed funds could be better.
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Evaluate fees: Lower fees can significantly impact your pension growth over time. Compare providers to find competitive rates.
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Check for additional benefits: Some providers offer features like ethical investment options or tools to consolidate old pensions.
SIPP vs Personal Pensions for Self Employed People?
If you’re self-employed and scratching your head over which pension route to take, you’re not alone.
Two of the most popular options you’ll come across are SIPPs and standard Personal Pensions.
They both help you save for retirement and offer tax relief- but they cater to very different types of investors.
SIPPs: For the DIY Investor
SIPPs are like the pick-and-mix counter of pensions.
You get access to a huge range of investments- everything from individual shares and ETFs to investment trusts and commercial property.
If you want control, flexibility, and enjoy making your own investment decisions (or working with a financial adviser), a SIPP could be your dream setup.
Pros:
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Total control over where your money goes
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Access to a broader range of investments than standard pensions
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Great for those with experience or a keen interest in investing
Cons:
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Can be overwhelming if you’re new to investing
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Often comes with higher fees, especially if you trade frequently
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Time-consuming if you’re doing it all yourself
Personal Pensions: For the Set-It-and-Forget-It Crowd
Personal Pensions, on the other hand, are designed to be much more hands-off.
Your provider typically gives you a range of ready-made portfolios to choose from based on your risk level and goals. They’ll handle all the investing behind the scenes, so you can get on with running your business (or enjoying your weekends).
Pros:
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Easy to set up and maintain
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Investment decisions are taken care of for you
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Often lower stress and great for beginners
Cons:
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Less flexibility in how and where your money is invested
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Limited range of funds compared to a SIPP
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Might not suit you if you want more control over your pension pot
Go for a SIPP if you love being in the driver’s seat and have a decent understanding of how investing works (or you’re happy to learn).
Stick with a Personal Pension if you’d rather let the experts do their thing while you focus on growing your business or just don’t have the time or interest to tinker.
Either way, the key is doing something. A pension you contribute to- even if it’s simple and low-effort- is better than no pension at all!
How Much Should a Self-Employed Person Put into a Pension?
Ah, the million-pound question (literally, if you play your cards right).
When you’re self-employed, there’s no HR department sliding pension forms across your desk or automatically topping up your pot. It’s all on you. But don’t let that put you off.
The trick is figuring out what you can afford and what future you will thank you for.
Also see: How much should you have saved up for retirement?
Here’s a handy rule of thumb to start with:
Take your age, halve it, and put that % of your income into your pension each year.
So, if you’re 30, aim to save 15% of your income. If you’re 40, go for 20%. It’s not perfect science, but it gives you a solid ballpark.
Of course, real life isn’t always that tidy. Some years you’ll earn more, some less. Some months you’ll be rolling in invoices paid early (the dream), and others… well, beans on toast might be making a comeback.
The good news? You can be flexible.
Some pension platforms let you adjust or pause your contributions whenever you need to. Just try to make up for it in better months – your future self will still want a life of beach holidays and fancy cheese.
Here’s what to consider:
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Start early. Even small amounts grow big with time thanks to compound interest.
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Be consistent. A little every month is better than nothing at all.
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Take advantage of tax relief. For every £80 you put in, the government usually adds £20. That’s basically free money.
And remember: something is always better than nothing. You don’t need to be perfect — you just need to start.
Starting a pension when you’re self-employed might not feel urgent- especially when there are invoices to chase and deadlines to meet- but it’s one of the smartest financial moves you can make.
Take the time to explore your options, weigh up the pros and cons, and pick a pension plan that suits your lifestyle and goals.
The sooner you start, the more your money can snowball- thanks to compound growth and some generous tax perks.
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. Companies listed above are not necessarily endorsed by Money Magpie. When investing your capital is at risk.
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