Self employed pensions

HKH

Hi everyone, I'm just after some general advice or resources you can recommend for investing for future retirement if you're self employed?
I've basically been working in jobs for about 7 years in which I paid pension contributions through my employers so whatever I've got in the pot there, is there. However, I've recently become self employed (I'm 30) so I'm wanting to start investing into the future ASAP. I still have another part time job in which my pension contributions will continue through the regular scheme as I can't afford to go full time with my self employment just yet but that is the end goal. 

Just wondering if there are any self employed people here who are saving and what route you're going down? Private scheme, investments, ISA saving account? Forgive my ignorance as I'm new to this only recently becoming SE and the options are a bit overwhelming but I'd like to get the ball rolling now. My parents haven't been savvy in saving for retirement and I don't want to go down the same road, even now I think I've left it a bit late but better late than never I suppose. I've only just recently started saving and whilst the amount I have isn't huge right now, it's a start and I've proved to myself I am able to build cash.

Thanks very much for any help you can give me.

Zanderman

HKH said:

...........Just wondering if there are any self employed people here who are saving and what route you're going down? Private scheme, investments, ISA saving account? ................

A pension is far more tax-efficient (topped up by 25% immediately) than any other investments.
So it's a no-brainer really that a pension is the best option for retirement - it is, after all, what they're designed for.  Nothing else is.
As for which pension - there are loads of options.
An obvious one is a SIPP i.e. a Self-Invested Personal Pension.  Lots of providers for those - and easy to open but do require a bit of thinking to run - as you need to make some decisions. 
But, if you don't feel confident with SIPPs (and many don't - though you'll find most who post on here do!)) there are many off the peg systems for SE pensions - NEST, PensionBee, Penfold to name a few.  Those are all dead-easy to set-up.

xylophone

You already have a pension in place with your current part time job - are you able to increase contributions to it?

 

HKH

Zanderman said:

HKH said:

...........Just wondering if there are any self employed people here who are saving and what route you're going down? Private scheme, investments, ISA saving account? ................

A pension is far more tax-efficient (topped up by 25% immediately) than any other investments.
So it's a no-brainer really that a pension is the best option for retirement - it is, after all, what they're designed for.  Nothing else is.
As for which pension - there are loads of options.
An obvious one is a SIPP i.e. a Self-Invested Personal Pension.  Lots of providers for those - and easy to open but do require a bit of thinking to run - as you need to make some decisions. 
But, if you don't feel confident with SIPPs (and many don't - though you'll find most who post on here do!)) there are many off the peg systems for SE pensions - NEST, PensionBee, Penfold to name a few.  Those are all dead-easy to set-up.

Thank you Zanderman. I was briefly reading into SIPP but like you said I found it all a bit confusing, I'd have to look into that more. I've been looking into NEST and that seems simple and easy enough to do. I also have a savings account so I think I will keep adding to that and open up a pension account so I have a rainy day fund too. Now I just need to figure out how much to actually contribute, forecasting how much I will actually need upon retirement is a whole other monster entirely! 

xylophone said:

You already have a pension in place with your current part time job - are you able to increase contributions to it?

 

I didn't even think of that xylophone (can you tell I'm new to all of this? XD ) but that is something I'm definitely going to ask my employer about! My part time job is only bank staff in which I have to only do 1 shift every 3 months to stay on contract, so I may even just keep my job even if I do go full time as SE, just to have that to fall back on pension wise. Much appreciated for that.

AlanP_2

Have a look at LISA as well, 25% top up from government and tax free withdrawal (unlike pension), limited to £4k a year contribution.

Do you own a property? LISA can go towards deposit on that or can be used from age 60.

The option you choose needs to be part of an overall plan that makes best use of your circumstances. For example if you were a higher rate taxpayer pension would beat LISA.

Albermarle

Normally if you leave the part time work altogether , the pension will come with you , so you could still add to it as a SE person.
It will be worth you finding out the charges for the workplace pension and comparing them to NEST ; pension bee etc .

HKH

AlanP_2 said:

Have a look at LISA as well, 25% top up from government and tax free withdrawal (unlike pension), limited to £4k a year contribution.

Do you own a property? LISA can go towards deposit on that or can be used from age 60.

The option you choose needs to be part of an overall plan that makes best use of your circumstances. For example if you were a higher rate taxpayer pension would beat LISA.

Thank you Alan, LISA is on my list of one of the options to look into. I don't own any properties, me and my Mum live together and she rents the house from the council. She could get a mortgage on it should she wish and we were discussing the possibility of me taking over it one day but I'm still undecided on that. My circumstances at the moment are pretty stable with both of our incomes but I know I need to plan for the future too.

Albermarle said:

Normally if you leave the part time work altogether , the pension will come with you , so you could still add to it as a SE person.
It will be worth you finding out the charges for the workplace pension and comparing them to NEST ; pension bee etc .

Thank you Albermarle. I've just asked my current workplace if I can increase contributions and they said I can choose a percentage to contribute. My income varies month to month depending on how many shifts I pick up so it might just be worth me paying a set amount every month into a private pension. When I go full time SE it might not even be worth upping the percentage of my contributions in my PT job as I may not even make anything some months...

xylophone

 https://www.which.co.uk/money/pensions-and-retirement/personal-pensions/contributing-to-a-private-pension-explained/tax-relief-on-pension-contributions-explained-a27f53z7qg3f
To receive tax relief, your contributions cannot be greater than your relevant earnings (to £40,000) or £3,600, if you have no "relevant earnings".

Let's say that you earn a total of £30,000 a year from all sources and you have already made a contribution of £1000  (£800+ tax relief of £200) to an employer's relief at source scheme.

You choose to open a personal pension to run alongside the employer's scheme

You can now contribute up to £29,000 to your personal pension and receive tax relief.

You would actually only pay over up to  £23,200 to the PP provider  who would claim tax relief of up to  £5,800 and add it to the pot.

Albermarle

I've just asked my current workplace if I can increase contributions and they said I can choose a percentage to contribute

Your employer can only normally contribute a regular % of your salary so that makes sense.

However the provider of the pension will probably ( not certainly ) be happy to accept also  ad hoc payments from you directly , in addition to the regular contributions . Give them ( the pension provider ) a call to check.

Often workplace pensions have low  charges , so might be better than opening a new pension. At least it is an option