Self Employed Pensions
When you’re employed, your employer makes compulsory contributions to your pension via auto-enrolment (unless you opt-out). When you work for yourself as a sole trader, or you’re in a partnership, making pension payments isn’t mandatory. But, it’s still an important thing to consider. It is especially worrying that studies have found that 45% of self-employed workers between 35 and 55 have no pension.
Retirement savings contributions are there to set you up in retirement. Generally, investing money into a pension scheme will give you better investment returns than just putting it into a bank account. Plus, because the money is effectively locked away until retirement, there’s no temptation to dig into it in the meantime.
Chances are you’ve worked for an employer at some point, and have an existing super pension to add to. If you’ve never worked for anyone, it’s probably time to set up a fund. You can make regular contributions or make lump sums less frequently, to suit your cash flow. Contributions that you make will still benefit from tax savings, and these can mount up.
Another thing that’s very handy for the self-employed and generally offered through your retirement fund is insurance. Your fund may offer you life insurance and income protection insurance. Make sure that you take the time to really understand these policies, as the payout amounts may not offer enough money to replace the income you earn through your business. You may want to source an additional policy as a top-up.
If your business is a company and you employ staff, you are responsible for making auto-enrolment payments for eligible employees. There can be serious penalties for failing to do this, so take the time to fully understand your responsibilities.
If you need help with anything to do with pensions whether it is a self-employed pension or auto-enrolment help contact us and we can help advise you so you get the best possible deal.