Retirement on your terms: flexible planning for the self-employed

For self-employed professionals and freelancers, flexibility is often one of the greatest advantages of the working lifestyle. You choose your clients, control your working hours, and shape your career on your terms. So why should retirement be any different?

The good news is that retirement is no longer a fixed point in time. Since pension freedoms were introduced in 2015, individuals have gained far more control over how and when they access their pension savings. And for the self-employed, who are already used to designing their own work-life balance, this opens the door to a more gradual, personalised route into retirement.

At present, most people can start drawing from their defined contribution pensions at age 55. However, this minimum access age is increasing to 57 in 2028. That means if you were born after 5 April 1971, you may have to wait an extra two years before you can dip into your pension pot.

Planning ahead for this change is essential. If you were hoping to reduce your working hours in your mid-50s and top up your income using pension withdrawals, you may need to reconsider your timetable or look to other investments to bridge the gap.

Unlike those in traditional employment, freelancers and business owners often do not stop working entirely at a single retirement date. Many instead choose to wind down gradually – reducing their workload, taking on fewer clients, or stepping back from the business while still earning an income. This phased approach can work well alongside the flexible access features of modern pension plans.

If your income starts to fall as you reduce your workload, it may be possible to draw on your pension savings to plug short-term gaps. Alternatively, you may wish to start taking a regular monthly income from your pension to supplement part-time work or project-based income.

Using your pension in this way can offer valuable freedom, but it is not without its complexities – and it’s important to understand the rules before you start.

One of the key risks for those accessing their pension flexibly is triggering the Money Purchase Annual Allowance (MPAA). This is a reduced allowance that comes into effect when you take certain types of pension income, such as a taxable lump sum or flexible drawdown.

Once triggered, your annual allowance for defined contribution pension contributions drops from £60,000 to just £10,000 (2025/26 figures). This can severely limit your ability to continue building up pension savings, especially if you are still working and able to make further contributions.

There are ways to access your pension without triggering the MPAA, such as only taking your tax-free lump sum and leaving the rest invested. It’s important to take advice before drawing any income, so you do not unintentionally reduce your future planning options.

Not all pension schemes are created equal. Some older or workplace plans may offer limited options when it comes to drawing an income. For example, they may not offer flexible drawdown or a wide choice of investments. That can become a problem if you want to take income in a tax-efficient or tailored way.

Make sure your pension is held in a plan that gives you full control over how and when you access your money. This is particularly important if you intend to take income in stages or vary the amount you withdraw depending on your earnings in any given year.

You may wish to consolidate older pensions into a more modern and flexible plan, such as a SIPP (Self-Invested Personal Pension). However, this should only be done with care and the right advice, especially if any of your existing pensions have valuable guarantees or other benefits.

Just as your retirement income should be flexible, so too should your investment strategy. Your pension investments need to reflect your personal goals, timescales, and risk appetite – particularly as you approach or enter retirement.

Too often, pension plans are left in “default” investment funds that may not be suitable for your needs. These off-the-shelf solutions can be overly cautious or too aggressive, and they often take a one-size-fits-all approach that does not consider your circumstances.

Your retirement strategy is unique to you. A bespoke investment plan should consider how much income you need, how long your pension needs to last, and how comfortable you are with short-term market ups and downs. For example, you might want to hold some money in lower-risk assets to cover the first few years of income, with other parts of your pension invested for longer-term growth.

A financial adviser can help you create a personalised plan that balances your income needs with the potential for growth, and manages risk appropriately across your retirement journey.

For self-employed professionals, retirement does not have to be about switching off completely. With the right planning and advice, it can be a flexible, gradual process – one where you stay in control, continue doing the work you enjoy, and draw income from your pension and other investments when it suits you.

The key is to plan ahead. Understand when you can access your pension, how to avoid unnecessary tax charges, and whether your current pension arrangements give you the flexibility and investment choice you need. Most importantly, ensure your retirement strategy is tailored to you, not built around a template.

At Chase de Vere, we work with IPSE members to provide fully independent, personalised advice on pensions and retirement planning. Whether you are just starting to think about the future or you are already winding down your working hours, we can help you build a retirement plan that reflects your ambitions – not just your age.

If you are an IPSE member and would like to discuss your retirement planning with a Chase de Vere adviser, you can request a free initial consultation. There is no cost or obligation – just an opportunity to explore your options with a specialist who understands the needs of self-employed professionals.
 

The information contained within this article is for guidance only and does not constitute financial advice