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pension-tipsAnyone who is self-employed knows that saving into a pension can be difficult. You don’t have an employer contributing into it and it is quite rare to have a regular income for regular savings.

However, that doesn’t mean that you shouldn’t put money aside for retirement. There will come a day when you want to give up work and you cannot rely on the State Pension. At present, you will be entitled to £110.15 a week but this is based on 30 years of National Insurance contributions.

As you can see, this is hardly going to provide you with enough funds for a reasonable standard of living. This is why it is essential to put aside some money so you are prepared.

Here are 7 top tips to make sure you are financially-savvy:

- As a basic-rate taxpayer, you can get your contributions topped up by HMRC. For every £100 you put in, the taxman will add an extra £25. It’s not as much as an employer would do but it’s still beneficial.

- The key is to start as early as possible. The earlier you start the more you will get when it comes to retiring. According to The Money Advice Service, if you start at 25-years-old and have on average 6% investment growth throughout, you’ll save around £190,000.

- Estimate what you need to save to ensure you have enough funds when you retire. Here is a calculator to help you work out how much you need to put away and for how long.

- Don’t put away too much in your pension because you could be financially worse off. You can pay in up to £50,000 including tax relief for 2013/14 but if you go over this you won’t get tax relief on further contributions. Please note that the allowance for 2014/15 is being reduced to £40,000.

- Stakeholder pensions are arguably the best type of pension for you because they are flexible and have low charges compared to other types of schemes. If you have irregular income from month to month, this pension is right for you.

- Some self-employed people prefer SIPPs instead (Self Invested Personal Pensions). Essentially you choose how your money is invested be it in equities, hedge funds or commercial property. You can manage the investment yourself or you can hire a professional to do it for you.

- Know what you are entitled to. When you reach state pension age, you will no longer have to pay National Insurance contributions. If you’re self-employed and you get a pension you may be on a low income and be able to claim Pension Credit to supplement your low income. However, if you get a personal pension and a State Pension you’ll have to pay tax in different ways. Click here to find out what tax needs to be paid and when.

So there you have 7 top pension tips for the self-employed. Remember, you can’t rely on the State Pension for your retirement so get saving now and you will be financially prepared for your future.

The kind of pension you pay into will have a huge impact on your forthcoming years. It’s integral that you make an informed decision now.

This article was provided by Cheselden Continuing Care, an independent organisation of clinical experts. We help people with serious, long-term health conditions access the NHS funding to which they’re entitled and we can also support you through the often difficult process of placing a loved one in care by offering advice and guidance on finding the right home and handling your finances.

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