The Search For A Self Employment Pension
After I left my coffee shop job last June, I've had the nagging feeling at the back of my head that I need to sort my pension out, lest I never retire and have to sell kits and teach workshops til I'm 99.
I've been looking primarily at Nest, as two of my previous employers have paid into my pensions through the company. They offer pension options for the self employed, which you can control yourself by setting up a direct debit for any amount you want, starting from £10 each time, or contribute ad hoc anytime with a minimum of £10 per transaction.
They also claim to invest responsibly, cutting their ties with companies that make their money in fossil fuels and are generally making their portfolio cleaner and greener.
They also sort the tax relief for you too, if you're eligible. And since us self employed folk don't get any employer contributions added, every little helps!
They automatically claim your 20% tax relief, so if you put in £100, they'll add in an extra £20.
Nest also have a handy pension calculator that lets you decide when and how much you want to retire with and works out how much you need to contribute each month to acheive your goal - and let me tell you, it's an eye opener.
Next I investigated Penfold - not solely for the self employed but they do seem to have more options and certainly market themselves well towards a self employed audience.
I was very interested to see if their pension calculator would yield the same results as Nests, given that they probably use the same kind of formulas.
It works a different way to the Nest one so it's a little hard to compare at first, but once I'd done a bit of tweaking I managed to get a result to compare.
If I were to contribute £100 a month here's what I'd get from each when I turn 68:
Nest Total Pot: £81,100
Penfold Total Pot: £99,070
That's a total difference of £17,970 which is a good chunk of change!
Now the personal benefit of me using Nest is that I have an existing pension there, so for after a bit of back and forth with myself I personally decided to stay with Nest, and I'll be honest with you: mainly because I'm lazy and couldn't be bothered to switch my existing pension pot from Nest over to Penfold.
If at some point I do decide to stop being lazy and move over to the provider with the higher total end goal, Penfold's website assures me that it's easy to do and can be moved over in a matter of days with little effort from me.
Both have good scores on Trustpilot, with Nest have an average review of 4.1, and Penfold just ahead at 4.3.
I also tried to compare fees, but it proved tricky to get past the jargon on their website to understand who charges what. Based on reviews though, the general consensus was that Penfold have high fees compared to a lot of other pension providers, not just Nest, so that's a mark down for them.
So I chose Nest, and I was pleasantly surprised at how easy it was to chuck £250 in there and it was done. Going forward, I'll be working out what I can afford to contribute each month and setting up a direct debit. I may also deposit any extra available chunks of cash at the end of each tax year - because remember: making pension contributions are a really easy and effective way to get some tax relief, plus you help yourself in the long term by investing as much as you can.
Now please remember, I'm in no way a financial advisor, just a freelancer living the self employed life and figuring it all out as I go. I hope this has been of some help if you're also self employed - let me know how your pension is working out for you!
Me at 68 x
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