Pensions for Contractors

We help you make better choices with your money.

As a contractor, no one is going to help you prepare for your retirement.

What provisions have you already made? Are they enough to allow you to stop working, when you want, rather than when you can afford retirement?

Are you using pensions to save effectively and reduce the level of tax you pay on your income? Pensions are one of the most effective ways to reduce the tax you pay on your income.

In addition to the tax savings, pensions have never been as attractive as they are now. In April 2015, the government gave people over the age of 55 the freedom to use their defined contribution pensions as they wish.

An advisor can review all of your historic pensions to help you ‘get in control’ and build a plan to ‘feel in control’ of your financial future. Failing to plan effectively could mean you do not have the income you wish for potentially the longest holiday of your life, retirement.

Under the new system, you have greater flexibility in how you can access your pension in retirement. The options for taking income are:

Flexi-access drawdown:

This option allows you to draw as much or as little from your pension fund as you like. There is no upper limit on income, so you can take the entire fund if you wish. Up to 25% of the amount you move into flexi-access drawdown is tax-free, if you have not previously used the fund for drawdown. Income after that is taxed at your marginal rate of Income Tax.

Note depending on your fund value, taking income above certain levels may not be sustainable or tax-efficient.

Uncrystallised funds pension lump sum (UFPLS):

There is an option that allows you to take a one-off payment or several lump sums directly from the pension fund itself. Each time you take a lump sum though UFPLS, 25% of that withdrawal will be tax-free and the rest will be taxed at your marginal rate of Income Tax.


Annuities are not new and they will remain the right choice for many people at some point during their retirement. Traditional annuities pay a guaranteed income for life in exchange for your pension fund. You can normally choose an annuity to pay a level income, or one that rises over time.

The value of a pension with St. James's Place will be directly linked to performance of the funds you select and the value can therefore go down as well as up. You may get back less than the you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

Got a question?

If you would like to speak to us about a particular issue or wish to find out more about the services we offer, please get in touch.