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Preparing for your retirement as a freelance worker

06 March 2020

Article written in conjunction with guest author: Mary Hemingway from Financial Advice Firm, Truly Independent.

Recent research from YouGov showed that 50% of people working in the UK say that they won’t have enough money to keep themselves in the lifestyle they’re accustomed to when they retire. As a freelance worker, saving for your pension is entirely your responsibility.

Paying your national insurance contributions may allow you to benefit from the State Pension, but with uncertainty over the future of the State Pension, you should consider what you can do to support yourself in retirement. The State Pension is currently £8,750 a year; if this is not enough for your lifestyle then read on to find out how you could save for retirement.

The most common way that freelancers can save for their retirement is in a private pension account, managed by companies such as Aviva, Royal London, Scottish Widows, Liverpool Victoria or Old Mutual Wealth.

In a private pension, you will pay into your pension fund regularly, usually monthly, or just pay into it whenever you want.

Depending on your pension provider, your money will be invested into shares, bonds, property or cash, which will hopefully bolster your savings pot, although investment growth can’t be guaranteed.

Again, depending on your provider, you may be able to access your pension as a lump sum payment, usually from the age of 55.  You can use your pension to buy an annuity, which is a guaranteed income or a mixture of tax-free or taxable lump sum and income.

If you search on comparison sites such as, you will see that there are several different providers all with varying offers. If you are unsure which pension provider or product is right for you, seek advice from a financial advisor.

Pension products

Have a good shop around to see what kind of pension the different companies are offering. To do a bit of research, ask friends, family, colleagues or industry peers who they use for their pension, and ask a little about the service that they have received. This will be a great early indicator of which providers you could use and which ones you should avoid.

Ask for a key facts document from each of the providers you might be interested in to find out the key information that you might need to know before handing over any money.

Payment contribution

As some of the pension providers have minimum contributions, it is worth ensuring that you can meet this commitment. As a freelancer, you may have an irregular income or a tight budget, so choosing a pension that suits your income is vital.

If your business is a registered company, any pension contributions you make are allowable business expenses, further reducing your tax liability. The tax efficiency doesn’t stop there, the pension fund grows free of tax too. Usually, 25% is tax-free when you withdraw it after 55.

Pension provider fees

Most private pension providers will charge a percentage of your contribution as a fee, but there may also be admin fees, transfer charges, investment management charges or missed payment or early access penalties.

Fees should be disclosed when you open the pension and regularly throughout the life of the pension. It’s important to keep an eye on the cost as any fees deducted will mean less in the ‘pot’ for your future retirement.

Check how your money is invested

Some pension providers may ask you how you would like your money to be invested, so depending on your appetite for financial risk, you could choose to have your money invested in a variety of different ways.

Low-risk investments may yield a lower return but are more likely to keep your initial investments safer, whereas high-risk investments are designed to give you a high return on investment, but there is also an increased chance of losing a higher percentage of your investment.

Examples of low-risk investments are cash instruments, corporate bonds and loans to the government called GILTS, whilst high-risk investments could be stocks, shares and commodities, such as gold.

Ask for advice

Don’t be afraid to ask for advice from an independent financial adviser (IFA).

You will normally have to pay to get advice from a financial adviser, but this advice will help you make a decision when it comes to looking after your money.

Consider taking a look at or that can match you to a local, qualified and registered IFA.

We spoke to Coldstream based Independent Financial Adviser, Mary Hemingway who told us:

“With the future of state pensions looking so uncertain, there has never been a more important time to invest in your private pension. These days pensions can be incredibly flexible or provide fixed guarantees, you should make sure to research all options available to you before choosing.”

“One of the main advantages of using a pension to fund your retirement is the tax relief on your contributions. If you are making a personal contribution, your payment will be boosted by your highest marginal income tax rate, so if you pay £80 into your pension it will automatically be turned to £100 with the addition of 20% tax relief at source. If you are a higher or additional rate tax payer you can claim further tax relief via your self-assessment tax return.”

“When it comes to how your money is invested, most pension providers will help you spread your money across a range of assets to decrease the risk of having all of your eggs in one basket.”

“A recent study into the value of financial advice found that people who used a Financial Adviser accumulated about £41,000 on average more than counterparts with no Adviser, so using a financial adviser can really help you when it comes to your retirement.”

Mary is an IFA for National Financial Advice Firm, Truly Independent. Mary is a retirement planning specialist with nearly a decade of experience in Financial Services and offers bespoke and independent financial advice.

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