Pensions are a perrenial problem for freelancers: lots of self-employed people don’t save into one at all.
There are several reasons for this:
- With average earnings around £17,000, many will feel they don’t earn enough to save
- Fluctuating incomes are a blocker to setting up a monthly direct debit
- There are lots of types of pension
- Lack of clear/useful advice
- IFAs can be expensive
It’s not straightforward.
However, there are some new fintech companies on the block that make things easier. Penfold, the sponsor for this section of the guide, is one of them.
These start-ups are attractive because:
- Their apps/websites make it easy to understand the benefits and risks
- They prioritise making it easy to adjust contributions
Companies like this didn’t exist when I started freelancing. They’re a welcome addition to the market for busy freelancers who may not have the time to learn the ins-and-outs of different types of pension and may not have the funds to spend on specialist advice.
At this point, I should say that this isn’t pension or financial advice. You should speak to an independent professional about your situation if you can. As with any investment, capital is at risk.
How much to save to save #
A common rule of thumb is to take the age you started saving for a pension, halve it and save this percentage of your salary for the rest of your working life.
This figure is pre-tax but also includes the Government contribution (which is an additional 25% of whatever you contribute).
Further reading #
Tax, Pensions & Accounting sponsor
Our friends at Penfold provide the self-employed (whether you’re a freelancer or Limited Company) with a completely digital, FSCS-protected & FCA-regulated pension:
- It’s simple to use & completely flexible – pause your contributions or make one-off top-ups any time you like.
- HMRC adds £25 for every £100 you pay in...or more for higher earners!
- LTD companies can deduct contributions from their tax bill
- Work Notes readers get £25 in their pension by using the referral link (or referral code: Work Notes)!
Pensions are a long term investment, and your capital is at risk.