Freelancer Pensions 101
In this episode, we’re tackling a topic that freelancers often put on the back burner: pensions. How do you start saving for retirement when you don’t have a traditional workplace pension? How can you make the most of tax relief? And what are the best strategies for long-term financial security?
Joining Emilie Bellet is Lisa Picardo, Chief Business Officer UK at PensionBee. Lisa is here to break down why pensions matter for freelancers, how to set one up, and what you can do today to secure your financial future.
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Key Takeaways: Pensions for Freelancers with Lisa Picardo
1. Freelancers Don’t Have Auto-Enrolment – So It’s On You
"Most employed workers benefit from auto-enrolment, where their employer automatically contributes to their pension. Freelancers don’t have that safety net, so the responsibility falls entirely on them."
Unlike employees, freelancers aren’t automatically enrolled in a workplace pension. That means you need to actively set up a pension, manage contributions, and track how your money is invested.
Starting early allows your savings to grow over time and benefit from compound interest. Even small contributions now can make a big difference in retirement.
2. Workplace Pensions vs Personal Pensions
"If you’ve had a workplace pension in the past, it’s worth tracking down your old pots. You may want to consolidate them into one manageable plan."
Workplace pensions are set up and managed by employers, while personal pensions are entirely your responsibility. Both offer tax benefits and are typically invested in defined contribution schemes, meaning your final pension amount depends on how much you save and how well your investments perform.
Freelancers should consider:
Tracking down old workplace pensions and consolidating them for easier management
Setting up a personal pension that allows flexible contributions
Reviewing pension fees to ensure you’re getting value for money
Lisa Picardo Emilie Bellet The Wallet Podcast
3. Delaying Pension Savings Can Cost You
"Smaller pension pots mean less financial security later in life, potentially forcing you to rely on the state pension or other savings."
The state pension alone is unlikely to be enough to sustain a comfortable retirement. In 2025/26, the full UK state pension will be £230.25 per week (£12,000 per year)—far below what most people need.
You need 35 years of National Insurance contributions to qualify for the full state pension, so freelancers with irregular earnings should check their contribution history and consider voluntary top-ups.
4. How Much Do You Need to Save?
"Most people don’t have a clear number in mind when it comes to retirement savings—but there are tools that can help."
Freelancers can use pension calculators to estimate how much they need to save based on their desired retirement income. The PLSA Retirement Living Standards provide a rough guide:
£14,400 per year for a minimum lifestyle
£31,000 per year for a moderate lifestyle
£43,000 per year for a comfortable lifestyle
A simple rule of thumb: Multiply your desired annual retirement income by the number of years you expect to be retired to estimate your total pension target.
5. What’s a Good Contribution Percentage?
"People want the magic number, but the best approach is to start with what you can afford and increase it over time."
In a workplace pension, the minimum contribution is 8 percent of your income (5 percent from you, 3 percent from your employer). Freelancers should aim for at least 10-12 percent, with 15 percent being ideal if financially possible.
The key is consistency—starting small and increasing contributions as income grows.
6. How Does Pension Tax Relief Work?
"For every £100 you save into a pension, the government adds an extra £25—meaning you get an instant 25 percent boost."
Pension contributions qualify for tax relief, making them one of the most tax-efficient ways to save.
Basic rate taxpayers receive a 25 percent top-up (e.g., £100 saved becomes £125)
Higher rate taxpayers can claim additional tax relief through self-assessment
Limited company directors can make employer pension contributions, reducing their corporation tax liability
Even if you’re on a fluctuating income, contributing small amounts when you can helps maximise these benefits over time.
7. Finding & Consolidating Old Pensions
"The average UK worker changes jobs 11 times—meaning many have forgotten pension pots scattered across multiple providers."
If you’ve had a workplace pension in the past, track it down using the Government Pension Tracing Service. Many freelancers choose to consolidate old pensions into one plan for easier management, potentially lowering fees and improving investment growth.
8. Your Pension Investments Matter
"It’s not just about how much you save—it’s about how your pension is invested. Make sure it aligns with your retirement goals."
Your pension is a long-term investment, meaning it should be actively growing over time. Many providers offer ethical or sustainable investment options, so freelancers should check where their pension is invested and whether they’re getting good value for money.
If you have multiple pension pots, keeping them in high-fee, low-growth funds could limit your long-term returns.
9. How to Balance Pensions With Other Financial Goals
"Saving for retirement can feel overwhelming when you’re juggling other financial priorities like building an emergency fund or saving for a house."
Freelancers should balance pension contributions with:
Emergency savings (3-6 months of expenses)
Short-term financial goals (home deposit, investments)
Long-term wealth building (pension, stocks and shares ISAs)
Flexibility is key—some months you may contribute more to your pension, while in slower months, you might reduce contributions.
10. It’s Never Too Late to Start
"The best time to start saving for retirement was yesterday. The second-best time is today."
While starting early is ideal, even those in their 40s and 50s can build a meaningful pension. Higher contributions, tax relief, and investment growth can all help boost savings in later years.
If you haven’t started yet, the most important step is to take action today, even if it’s just setting up a pension and making small contributions.
Final Thoughts
Pensions don’t have to be complicated. By starting small, making the most of tax relief, and regularly reviewing your progress, freelancers can build long-term financial security—on their own terms.
PARTNER
Thank you to our partner PensionBee. With PensionBee you can combine, contribute and withdraw online. Take control of your pension, so that you can enjoy a happy retirement and join over 265,000 customers saving with PensionBee.
