When you are self-employed and running your own business, the logistical and time pressures of your day-to-day operations can make it all too easy to neglect proper pension planning. Yet prioritising getting a financial safety net in place for your retirement should be top of your to-do list. |
The responsibility for setting up pensions for self employed people falls on your own shoulders. What’s more is it can be difficult to know which private plan is the most appropriate for you as an individual without getting expert guidance.
Here are the key factors to consider when researching your options and taking ownership of your pension.
Finding the Ideal Plan
The benefit of private pension plans is that you have the choice of a wide range of options rather than being assigned a one-size fits all company plan as an employee. However, this means that finding the best pensions for self employed business owners is a matter of working out which features suit you as an individual. Helpful questions to consider are:
? How much can you afford to invest? ? What is the most tax efficient way for you to contribute? ? What is your attitude towards risk? ? How much income will you need in retirement?
Whichever plan you opt into, your aims should ultimately be the same: to take ownership of your future and ensure that you have a strong investment portfolio in place to meet your income needs in retirement.
How Much to Contribute
Calculating how much you can afford to pay into your plan is essential to getting the most out of your pension. Take a look at your current lifestyle, business expenses and personal spending habits and reflect on what you would like your retirement lifestyle to be like.
Your objective should be to contribute as much as you can comfortably afford. Pensions for self employed people are completely under the individual’s control. To secure a sizable pot, you need to take things into your own hands.
Tax Efficiency and Flexible Access
Another feature of private plans that you should check is whether you will have flexible access. Being able to withdraw tax free money from your pot when you need it, even before you have properly retired, is extremely important.
Contributing to a pension fund can bring significant benefits to your business and personal tax position. You should also speak to an expert about how best to structure your plan in order to achieve its optimum benefits.
Hire an Expert
Pensions for self employed people are a complex area, and they require extensive strategizing to get right. Hiring an expert to guide you can take out the stress of the situation and help you make an informed decision.
It is crucial to get proper guidance for a whole array of other reasons, too. You will want to stay compliant with tax laws while maximising tax relief, to ensure that your fund will continue to grow well over time, and to have support planning your finances and mitigating the risks of running out of cash later down the line.
When it comes to pensions for self employed business owners, there is no quick and easy answer. Nonetheless, with a little outside help from professional advisers, you can find the ideal private plan for you as an individual – and secure your future at the same time.
Claire Novakovic is the go-to expert for those who need advice on a pension for self employed business owners. As a Chartered Financial Advisor, she also holds the relevant FCA permissions to conduct pension transfer business including defined benefit schemes. Accudo Investments offers comprehensive independent financial advice tailored to each individual’s needs, using effective portfolio management and tax strategies to meet the needs identified.
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