Pensions For The Self Employed

A self-employed person has various options when considering private pensions for retirement.

Private Pensions

Personal Pension Plans (PPP)
Personal pension plans (PPP) are defined contribution arrangements meaning that you build up a pot of money that will provide you with retirement benefits. The value of the pension is accumulated through investment contributions paid by you.

They are investment policies that will provide income in retirement and available to any UK resident.

You will contribute to your pension plan to build up the fund and the amount of pension payable when you retire will depend on factors such as:

  • The amount of money you have paid into the scheme
  • How well the investment funds perform
  • The ‘annuity rate’ at the date of retirement. An annuity rate is the factor used to convert the pot of money into a pension.

Stakeholder Pensions
A stakeholder pension plan is a defined contribution arrangement that will provide an income in retirement.

The policyholder contributes to the fund and the money is invested to build it up and the pension payable on retirement is dependent on the amount of money paid into the scheme, the performance of the fund and the annuity rate at the point of retirement.

Stakeholder pension schemes are subject to a minimum set of requirements laid down by the government to help those wishing to invest modestly into their pension.

Self-Invested Personal Pension (SIPP) Plans
Self-invested personal pension (SIPP) plans will allow the policyholder greater flexibility in the investment plans of their pension. The policyholder can have control over investment strategy and have the ability to appoint a stockbroker or fund manager.