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How can contractors benefit from pensions advice?

Planning for your future

Saving isn’t easy for everyone, and for those who may be on irregular earning patterns – such as freelance contractors – putting money away each month can sometimes be difficult.

Yet, creating a plan for your future can help you take the necessary steps to manage anything unforeseen circumstances that you may encounter, such as financial issues, home maintenance, and any other unforeseen expenses.

Pensions play a key part in most people’s lives, and it’s never too late to start a pension and to save for your future.


Why is it important for freelance contractors to have a pension?

It is natural for young people who may have just started their careers not to consider a personal pension.

Thankfully, since 20171, employers are now obliged to provide a workplace pension for their full-time2 and part-time3 staff, which at least means that people will have some pension to supplement the state pension when they retire. But what about freelance contractors?

As a freelance worker, you do not receive the same benefits as a PAYE employee. Therefore, if you want a pension income in retirement you need to set up your own pension and contribute to it on a regular basis.

On top of this, although the state pension could provide you with a basic retirement income, it may not be enough for you to live on, and guaranteeing sufficient qualifying National Insurance contributions would be vital to ensuring you receiving the maximum allowed stated pension. Many Limited company freelancers draw minimum wages and claim the remainder back via dividends. This can mean minimal National Insurance contributions, which might save some tax liability in the short-term, but it could impact on your state pension in the long-term.

A single person will need £31,300 a year for a moderate income in retirement, according to a pensions industry body. The Pensions and Lifetime Savings Association (PLSA) uses evidence from focus groups to make the estimates.

It is intended as a guide for those planning their retirement savings. The calculations are pitched at three different levels – minimum, moderate and comfortable – and are developed and maintained independently by the Centre for Research in Social Policy at Loughborough University.

They estimated that a single person needed £14,400 a year for a minimum income, and £43,100 for a comfortable retirement.

Couples required a joint £22,400 at the minimum level, £43,100 at the moderate level, and £59,000 at a comfortable level.



What are the three key benefits of having a pension?

  1. Pensions can help you maintain your standard of living in retirement, when you may no longer be able to work, or even want to work.
  2. A pension can provide guaranteed monthly income for life once you reach retirement age. This makes financial security in retirement much more achievable for those who have a pension, which can enable them to be able to afford to do the things they value in life, such as travelling.
  3. If you have opened a pension – and contributed on a regular basis – since you began your working life when you were young, that pension could enable you to retire early and spend more time enjoying life rather than working.


What is the outlook for the pensions market?

The pensions market has experienced mixed fortunes in recent years. The market is expected to achieve a Compound Annual Growth Rate of more than 2% from 2022 to 2027. This is largely due to a rise in workplace pension enrolment, which fuelled a strong growth rate in 2022. However, in recent years most other pension types have contracted4.

The Pensions Act 2007 legislated to increase State Pension age for both men and women to age 66 between 2024 and 2026, age 67 between 2034 and 2036 and age 68 between 2044 and 2046.

Research suggests that this is not enough, and that anyone born after April 1970 may have to work until they are 71 before claiming their pension.

This age limit may need to be set even higher, say experts, thanks to the high rate of workers exiting the workforce before they reach state pension age, predominantly due to preventable ill health.

From 2028 onwards, the government’s intention is that the Normal Minimum Pension Age (NMPA) for private pensions should be ten years below State Pension age, although they are not automatically linking NMPA increases to State Pension age increases at this time.

Encouraging people to work for longer means older workers will carry on contributing to the economy and paying taxes for longer before they start drawing on a pension income. It also means that they’re arguably less likely to run out of money in old age and become reliant on the state for extra support.


What are the advantages of combining pensions?

If you have worked for multiple different employers, you will likely have accrued a handful of different pensions. Encouraging people to work for longer means older workers will carry on contributing to the economy and paying taxes for longer before they start drawing on a pension income. It also means that they’re arguably less likely to run out of money in old age and become reliant on the state for extra support. Combining your pensions into one plan can yield many advantages:

  • Lower annual fees – Every pension charges an annual management fee. By combining your pensions you will be reducing your fees, leaving you with more investment in your pension pot.
  • Less administration – By combining your pensions you will receive less paperwork and correspondence, making tracking your pension a lot easier.
  • Wider choice of funds – Combining your pensions into one larger pot could mean you gain access to a wider range of investment funds. Some of these funds could be better suited to your needs and offer higher growth opportunities.
  • Easier planning – With your pensions in one place you might find that it is easier to plan your finances for the future.

Please note: This should not be taken as advice to combine your pensions, it is simply information. There is a risk in combining your pensions, and your investment could go down as well as up, depending on market fluctuations.


Why seek pensions advice from iPensions Wealth?

  • Benefits of engaging with iPensions Wealth – You can be sure that your pension and investments are in good hands. You’ll be entrusting your pensions and investments with experts with over 20 years’ experience in financial services. iPensions Wealth’s Chartered Financial Adviser, Daivid O’Conner, has recently been awarded Top Rated Financial Adviser 2024 by VouchedFor, an accolade he was deservedly awarded in 2023.
  • UK-based personal service – The expert team at iPensions Wealth are very busy for a reason… because they’re great at what they do, and they provide a genuinely warm and friendly service to clients.
  • A broad range of services – At iPensions Wealth, you can manage and control all your pensions and investments in one place. Our expert team are vastly experienced in Retirement planning and advice; Income withdrawal management; Wealth management; Tax planning and advice and Protection insurance.
  • Cash Flow Modelling – we use cash flow modelling to produce a visual representation of how your finances look over your lifetime. This provides a powerful insight into your future financial health. It shows you how much money you could have in the future and whether you are on track to achieve your goals, helping to answer questions such as ‘Do I have enough money? ‘, ‘When can I afford to retire?’ and ‘Am I taking the appropriate level of investment risk with my fund?’. The cashflow model becomes your bespoke financial plan which is reviewed on an ongoing basis to ensure that you remain on track to achieve your objectives.



Investment risks

Past performance is not a guide to future returns. The value of investments and any income may go down as well as up This may be partly the result of exchange rate fluctuations) and an investor may not get back the full amount invested. The information, data, analysis, and opinions presented herein are provided as of the date written and are subject to change without notice. Every effort has been made to ensure the accuracy of the information provided, but iPensions Wealth Limited makes no warranty, express or implied regarding such information.


Important Information

The Financial Conduct Authority does not regulate tax advice.

This communication is for iPensions Wealth Clients only and is not for general consumer use.

Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security, or strategy. The commentary does not constitute investment, legal, tax or other advice and is supplied for information purposes only.

Issued by iPensions Wealth Limited, Second Floor, Marshall House, 2 Park Avenue, Sale, M33 6HE, UK. Authorised and regulated by the Financial Conduct Authority.




  1. Understanding the Mandatory UK Pension Scheme (
  2. Workplace pensions – what your employer can and cannot do – GOV.UK (
  3. Your pension if you’re working part time | MoneyHelper