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The best ways to save for retirement when you're self-employed

Updated September 2025

When you’re self-employed and not enrolled in a workplace pension, there are a few ways you can set yourself up financially for retirement - from private pensions to lifetime ISAs.

There are currently around 4.4 million self-employed people in the UK. That’s a lot of people who may be looking at retiring without a workplace pension to support them.

If you're self-employed and considering ways to save for retirement without a workplace pension, you might be unsure about what your options are.

Firstly, don't panic. There are many ways to build a retirement fund in a way that suits you, and you don't have to choose just one.

From private pensions to lifetime ISAs, find out how you can save for retirement when you're self-employed.

What you can currently expect to get when you retire

State Pension

As long as you’ve paid National Insurance contributions for at least 10 years, you should be due a State Pension when you reach retirement age - which is currently 66 years old in the UK.

The State Pension criteria is pretty complicated, so it's worth using the government’s State Pension forecast tool to find out how much you can expect to get.

If you’re not yet entitled to the full State Pension, it could be worthwhile increasing your National Insurance contributions as you are likely to get back more than you pay in – but only if you’re not already at the maximum you’ll receive.

The full State Pension is currently £230.25 per week (as at September 2025). This amount may change before you reach retirement.

The State Pension can be a huge help, but it’s usually not enough for most people to keep the same lifestyle they had when they were working full time.

Keep reading to find out how you can build your retirement savings when you're self-employed.

Employer pension (if you have worked for an employer)

If you’ve worked for an employer at any point, you might've been auto-enrolled into a pension scheme - although you may have had the option to opt out.

With these pension schemes, a percentage of the money you earn will go to a pension fund instead of into your bank account. This happens before tax is taken so you don’t pay any tax on your pension contributions, but may pay tax when you start taking money out after you retire.

Usually the pension fund is invested, but this will depend on which pension provider your employer has decided to use. You should be able to find this out by speaking to the employer or checking through your pension documents.

How you can build your own retirement fund

If you don’t have an employer to set up a pension scheme for you and you want to retire with more than the State Pension to support you, you’ll need to set something up yourself.

And although it's tempting to put this off if retirement seems a long way away, the sooner you start building a retirement fund (whether you’re self-employed or not) the more money you could have to live on when you decide to stop working.

Here are some of your options:

	Private pension	Cash savings account	ISA	Lifetime ISA
Do you pay tax on money you pay in?	No	Yes	Yes	Yes
Do you pay tax on growth?	No	Yes	No	No
Do you pay tax on the amount you take out?	Yes	No	No	No
How does your money grow?	By being invested in a fund that invests in stocks and shares.	By building interest	By being invested in a fund, for stocks and shares ISAs. By building interest, for cash ISAs.	With a 25% government bonus on everything you put in. As well as by being invested in a fund, for stocks and shares lifetime ISAs. Or by building interest, for cash lifetime ISAs.
Is the money locked away for retirement?	Yes, until the age of 55.	No	No	No, but you'll pay a 25% fee if you withdraw before the age of 60 (unless you’re using the money to buy your first home)
What is the best way to use it?	As your main retirement fund	As a quick-access emergency fund	As an emergency fund or add-on to your pension	As an add-on to your pension

Private pensions

If you’re saving for retirement when you're self-employed, a private pension is the closest thing you can get to an employer pension.

There’s a variety of private pensions out there, also called personal pensions, and they work in the same way an employer pension would, where the money is paid in before you pay tax on it.

The main difference is that you'll be the only one paying money in, as you won't be getting any employer contributions.

Most private pensions follow the same rules. Any money you pay in gets “tax relief”, which simply means you’ll get back any tax you’ve already paid on that money. Although you may need to pay tax on it again when you start receiving your pension.

You can currently get tax relief on up to £60,000 a year paid into pensions (in total). Any money you pay in over this won’t get tax relief.

You usually have to wait until you turn 55 to take any money out, except in special circumstances like if you’re unwell.

This can be a good thing, as you can’t dip into the money you’ve put away for retirement.

However, it can be difficult to commit to saving for retirement when you’re self-employed, as you could have periods of lower income where you need your savings to keep you afloat.

Cash savings accounts

If you think you'll want to access your retirement fund before the age of 55, a cash savings account could be a good option. But it's worth bearing in mind that you'll miss out on the tax relief you’d get with a pension.

You can often pay in as much as you want, whenever you want, and you can take it out in an emergency or if you decide to retire early (but check the specific rules for the account). You’re also likely to receive interest on your savings (depending on the savings account you choose).

While being able to access the money easily might come in handy, this also means you could find yourself dipping into your retirement fund more than you’d planned to.

It’s also worth keeping in mind how inflation could affect the value of the money you save. While you can’t lose money with cash savings, that money might be worth less when you reach retirement if inflation (how much things cost) goes up faster than the interest you're earning on your money.

ISAs

As with cash savings accounts, anything you pay into an ISA doesn’t get tax relief so you won’t get back the tax you’ve already paid on that money.

However, a great feature of ISAs is that you won’t pay any tax on any interest or investment growth, no matter how much your money grows by.

Whereas you may need to pay tax on money you make in a cash savings account, if you make more than your Personal Savings Allowance (which is currently £1,000 a year for most people).

This makes ISAs a good option if you’re looking for an additional retirement fund and think you might earn more than your Personal Savings Allowance in interest or investment returns.

You can put up to £20,000 into ISAs each tax year, whether you choose a cash ISA or stocks and shares ISA.

You can withdraw money from an ISA if you need to, but it can take longer to do this than withdrawing from a cash savings account. So there’s more time to think about it if you’re considering taking money out.

Having a cash ISA or stocks and shares ISA as well as a private pension could be a great way to boost your retirement income, while still giving you the peace of mind that you could use that money early if you need to.

This could be a welcome buffer if you’re self-employed and have a few slower months income-wise.

Lifetime ISAs

Like standard ISAs, lifetime ISAs shouldn’t be used to replace a pension.

But they could be a great way to boost that pension, especially if you're self-employed, by building up a lump sum to pay for any retirement goals like travelling or home improvements.

As with other ISAs. you won’t get tax relief. But you also won’t pay tax on any interest or investment returns, no matter how much your money grows by.

With lifetime ISAs you’ll also get a 25% government bonus on top of everything you put in. You can put in up to £4,000 a year so there’s up to £1,000 of free money available each year.

The catch is that if you take any money out before you turn 60 you’ll have to pay a 25% withdrawal charge (unless you’re using that money to buy your first home). This penalty fee could leave you with less money than you put in.

You need to be aged between 18 and 39 to open a lifetime ISA, so it’s not an option for everyone. Once it’s open, you can keep paying money in until you turn 50.

So, if you open a lifetime ISA at the age of 30 and max out your £4,000 limit every year until your 50th birthday, you could get a £20,000 bonus in your retirement fund on top of the money you put in!

Lifetime ISAs are available as both cash and stocks and shares accounts:

Cash lifetime ISAs build interest like current accounts do. As with cash savings accounts, it's worth being aware that the same amount of money might buy less in the future.

This is because your money will build interest, but unless the interest rate is higher than inflation (the rate costs go up by), you might find the value of your savings is lower when you retire than it is now.

Stocks and shares lifetime ISAs don’t earn interest. Instead they invest in funds, along with other investors' money, that are used to buy various different types of investments: things like shares in companies, property and corporate and government bonds.

Your money increases or decreases as the value of those assets changes, giving it higher potential to grow by more than interest rates and inflation. So you could end up with more money when you retire than you would have if you’d chosen a cash lifetime ISA or savings account.

However, there is a risk that the value could go down as well as up so you could end up with less than you put in.

You can find out more about the differences between saving and investing in our ‘Is it better to save or invest your money? article.

OneFamily's Lifetime ISA

If you want to save for your first home or for life after 60, our Lifetime ISA could help. You'll get a 25% boost from the government on top of your savings, as well as any potential stocks and shares returns.

Open a OneFamily Lifetime ISA

Our Lifetime ISA invests in stocks and shares. This means it has good long-term growth potential, but the value of your investments could go down as well as up so you could end up with less money than you've put in.