Are you self-employed and looking to contribute to a pension scheme? The earlier you start saving, the quicker you’ll build up a pot for retirement - and, happily, saving for a pension is also tax-efficient.
NEST is one of the best-known pension schemes in the UK. But what is NEST, and how do you join it as a self-employed person?
NEST is a government-backed pension scheme set up to make sure that every employer can easily access a workplace pension scheme. This is particularly important since the phased introduction of auto-enrolment, which radically changed employers’ pension responsibilities.
The NEST scheme is easy to use, with 24/7 access online. It also claims to be one of the best-value pension schemes available, and offers a single fee scheme to make it easy to understand how much you’re paying in order to save.
There are many alternatives to NEST available, including a number of new app-based pension schemes. While NEST is a popular choice, you should make sure that you do your own research to check which pension provider is right for you.
NEST is best-known as a workplace pension scheme. However, self-employed people can also save with a NEST pension.
NEST pensions are available to both self-employed sole traders and the sole directors of companies with no employees.
However, it’s important to understand that if you employ anyone, you will have separate obligations with regard to workplace pensions. You should make sure that you seek advice from a qualified professional to understand your pension position if you’re an employer.
There’s a number of good reasons why you should consider contributing to a pension scheme when you’re self-employed.
The primary one, of course, is in order to save for retirement. The state pension is not particularly generous, and some self-employed people find that they have difficulties when retiring because of gaps in their National Insurance contributions.
To make sure that you have a comfortable retirement, it’s important to start saving.
As well as that, saving in a pension is tax-efficient. Pension contributions receive tax relief, with basic rate taxpayers normally receiving an extra £25 from the government for every £100 they save. You can read more in our guide to pensions for the self-employed.
To set up your pension with NEST as a self-employed person, you need to follow these steps:
You may have heard of auto-enrolment - the new requirement for all employees to be enrolled in and contribute to a workplace pension scheme.
There was some confusion regarding whether or not self-employed people would also be affected by auto-enrolment, but as it stands, self-employed people are not legally required to enrol in a workplace pension scheme.
However, that doesn’t mean that you shouldn’t save. As we’ve already seen, contributing to a pension scheme is a good idea for a number of reasons.
Remember, though, that NEST is not the only option. Make sure you do your research to understand the different types of pension on offer. For a comprehensive introduction to pensions, visit the Pensions Advisory Service.
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