Tax, investments and pension rules can change over time so the information below may not be current. This article was correct at the time of publishing.

Pension options for business owners

Being a business owner gives you freedom and flexibility to fit your work around your lifestyle. However, it also means that you need to manage your own finances.

A big part of this is setting up your own pension. If you are a sole trader, you will be unable to benefit from employer pension contributions.

In the UK, there are more than 4.8 million people who are self-employed yet only 31% of them are saving into a pension*.

You may have heard of the government’s auto-enrolment scheme that means all employed people over the age of 22 and earning over the specified amount are automatically opted into a pension scheme with their workplace and benefit from employer contributions as well as government tax relief. However, if you are self employed you are not eligible for this scheme and therefore need to set up a pension yourself.

You and your business might have been hit hard over the last few months due to Covid-19, and paying into a pension is unlikely to be at the top of your priority list.

However, it is important to start a private pension as soon as you can as the State Pension alone is unlikely to be enough for you to live off.

A pension is one of the most tax-efficient ways you can save for your future as you benefit from tax-relief from the government equal to your level of income tax. For example, if you are a basic rate tax payer you will receive 20% tax relief on any pension contributions you make.

Pension funds also benefit from compound interest, the longer that you do not contribute the less time your funds have to hopefully grow in value.

Below are some options for business owners to start a pension:

Personal pensions

Personal Pensions allow you to choose your own investments, however choices are often limited compared to other schemes such as a SIPP.

You can make regular or lump sum payments to a personal pension but there may be minimum contribution limits depending on your chosen pension provider.

Stakeholder pensions

A Stakeholder Pension is a type of Personal Pension that allows you to add smaller payment amounts. However, a Stakeholder Pension normally has a very limited range of investment choices

Self-invested personal pensions (SIPPs)

A SIPP is another type of Personal Pension that offers more flexibility and allows you to choose your own investments. This option allows you to diversify your assets to mitigate risk.

SIPPs will not be suitable for everybody and generally only those who are fairly experienced at actively managing their investment should consider this type of investment. The value of a pension can fall as well as rise. You may get back less than the amount invested.

Retirement Account

At Four Wealth Management, we offer the St. James’s Place Retirement Account which provides a tax-efficient way for individuals to save for retirement. This account offers access to a wide range of funds to help you achieve your goals, whether you are looking for income, growth or a combination of both. The account has the flexibility to provide an income through Flexi-Access Drawdown or Capped Drawdown, provided you have an existing Capped Drawdown pension arrangement to transfer to St. James’s Place. Your adviser can help you decide which is most suitable for your circumstances.

Find out more about your options

Start a pension today

If you are a business owner and want to know the best option for your retirement, call us on 0117 973 0500 or leave us a message to book a no-obligation meeting with one of our financial advisers.


*Money advice service, ‘Pensions for the self employed’, 2020

The value of a pension with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Enquire Now

If you have any queries or would like to arrange a face to face meeting with an adviser for a no obligation review of your personal finances, simply book a call back using the form below. Alternatively, you can call us on 0117 973 0500.

The Partner together with St. James's Place Wealth Management plc are the data controllers of any personal data you provide to us. For further information on our uses of your personal data, please see the Partner's Privacy Policy or the St. James's Place Privacy Policy.

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Pension options for business owners
FourWealth Management