Gloucestershire IFA: Independent financial services brokers based in Cheltenham offer lifetime financial planning and wealth management

Cheltenham Independent Financial Advisers Ltd (FSA number 494404) is an appointed representative of Financial Investments Ltd which is authorised and regulated by the Financial Services Authority. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. No investment decision shouild be taken based on the content of this site. Always take full individual advice first. The regulations governing tax rates and investments may change in the future.

Pension planning for the self-employed

A pension gives you a retirement income, paid for by investments built up during your working life. The state pension is funded by your National Insurance contributions but only provides a basic income. You may need another pension in order to retire comfortably.

If you are self-employed, you will not qualify for the additional state pension (also known as the state second pension). However, you can take out a private pension such as a personal pension or a stakeholder pension. The amount you get at retirement depends upon how much money has been paid in, how well it has been invested and the age at which you retire.

Pension options for the self-employed

1. Personal pensions

Can start receiving an income from a personal pension from age 50 (increasing to 55 by 2010)

No limit on amount you can save or the number of personal pension schemes set up

Any contributions you make won't affect entitlement to the basic State Pension

Non earners may be able to pay into a personal pension

Tax relief given on pension contributions up to 100 per cent of earnings

2. Stakeholder pensions

A type of personal pension having to meet certain government standards
You can contribute as little as £20 a month (but don't have to contribute every month)
You don't have to be working
Can start receiving an income from the age of 50 (increasing to 55 by 2010)
Tax relief given on pension contributions up to 100 per cent of earnings

This article ("Pension planning for the Self-Employed") is intended to provide a general appreciation of the topic and it is not advice. Guidance should be sought from a specialist like ourselves qualified to advise in your specific circumstances.

For more information on Personal Pensions, please contact Cheltenham Independent Financial Advisers Limited on 01242 269656 or email us at info@cheltenhamifa.co.uk. One of our advisers will be happy to assist you.