Pensions for the self-employed

You must be over the age of 18 and under the age of 75 and be a UK resident for tax purposes. You cannot make contributions if you are a US citizen or US Green Card holder.

Unfortunately, you can’t contribute to your personal pension if you’re a director of a business and plan on paying from your business account.

Your investments would be protected even if Royal Bank had to cease trading as a business. The underlying assets within each of the Personal Portfolio Funds available through Royal Bank Invest are held separately from Royal Bank by an independent company called a depositary, which is authorised by the Prudential Regulation Authority (PRA) and dual-regulated by the PRA and Financial Conduct Authority (FCA). 

This company, the Bank of New York Mellon (International) London Branch, keeps the Personal Portfolio Funds’ underlying assets safe and holds them separately from its own. 

Additionally, the Personal Portfolio Funds are based in the UK and so are covered by the UK Financial Services Compensation Scheme (FSCS), up to a maximum of £85,000 per person.

You can’t withdraw money from a pension until you are 55. This is expected to increase to 57 from 2028. There are also limits on how you can withdraw money from a pension. 

Royal Bank Invest Pension doesn't currently offer these withdrawal options, but we are working on a solution. In the meantime, you’ll be able to transfer your pot to another scheme.

What happens if I die before the age of 75? – If you die before age 75, the value of your pension investments may be paid to your beneficiaries as a lump sum. The money will normally be tax-free as long as they are paid within two years of your death.

If the total value of all of your pension pots, including the Royal Bank Invest Personal Pension Account, exceeds your Lifetime Allowance, your beneficiaries may have to pay an additional tax charge.

What happens if I die after age 75? – If you die after age 75, the value of your pension can still be passed to your beneficiaries. This will be subject to income tax, and you will need to refer to the relevant bandings and charges for the applicable tax year.

Both a personal pension and a Stocks and Shares ISA allow you to invest in a tax efficient way. However they differ on how and when you can access your money. With a personal pension, you can’t withdraw from it until you are at least 55 which is expected to rise to 57 in 2028. The money you withdraw is then taxable depending on your overall income.

With an ISA, you do not have to pay tax on the income you make however there is a lower upper limit on how much you can put into it each year. 

Self-employed people can qualify for the UK State Pension, but there are important considerations:

• You need to have made National Insurance contributions for at least 10 qualifying years to receive any State Pension.
• To get the full State Pension, you usually need 35 qualifying years of contributions.
• Self-employed people pay Class 2 and Class 4 National Insurance Contributions which count towards the State Pension.
• You can check your National Insurance record and projected State Pension amount on the government website.
• Remember, the State Pension alone may not provide enough income for a comfortable retirement, so additional savings are often necessary.

Estimating the value of old pension pots in retirement involves several steps:

1. Locate all your old pension pots using this government website.
2. Request up-to-date statements from each pension provider.
3. Consider factors like: 
   • The current value of each pension.
   • The type of pension (defined benefit or defined contribution).
   • Projected growth until retirement.
   • Any guarantees or special features.
4. Use online pension calculators or talk to a financial adviser to estimate future values.