If you work for yourself, funding a pension is something that can get left behind.  There are plenty of competing demands on your cash, especially in the early years of trading.  Here’s how you can make a start on your pension if you’re in your 40s and self-employed.

Some good news to begin with

The good news is that the tax system gives some handy privileges to self-employed people.

If you’re a sole trader, for example, you can use a personal pension, which is often better value than a PRSA.

And if you use a limited company, the contribution limits are considerably more generous than the age-related limits for employees.

What that means is that you have lots of scope to catch up on your pension for the years you’ve missed. You can also likely make a chunky lump sum contribution – for example, if you experience a year of exceptionally good trading.

How to go about your pension

In fact, that’s exactly the way many self-employed people sort out their pension.  We often recommend a two-pronged approach.

First, set up a regular monthly amount so that you’re building up retirement wealth all the time.

Secondly, get into the habit of sending a lump sum towards the end of your financial year once you have visibility on what your earnings will look like.

So how much should you pay into your pension?

If you’re starting your pension in your 40s, there is some catching up to do.  Take a look at our calculator to get an idea of what you’ll need.

Remember of course, that tax relief on the money you pay in will propel the value of your pension pot by as much as 67% straightaway.

The example below is based on starting a pension aged 40, and planning to retire aged 68.  If you’re a top-rate taxpayer, an after-tax pension contribution of just over €500 each month (that’s €886 before tax relief) could set you up for income of around €30,000 in retirement.

Screenshot 2021 07 03 At 18.26.35 &Ndash; Starting A Pension When You’re Self Employed And In Your 40S

Starting’s the hard bit

If you’re considering starting a pension in your 40s, don’t get too hung up on the numbers.  The hardest bit is to make a start.

Your contribution, however modest, will still benefit from income tax relief, tax-free investment growth, and a tax-free lump sum on retirement.  You can always increase it over the years ahead.

Interested to get going?  Just fill in the form below and we’ll be happy to help.


By investing €400 a month you could save €27,900 in 5 years

Using our "Picture your money" tool, you can find out how your money could work for you.

Start now It only takes a minute to get started

Note: This is an initial indication to help you picture your money. Remember that with investments it is not possible to know for certain what returns you will achieve. Please note the investment warnings at the bottom of the page. This is the approximate before-tax return on an investment which grew at 6% over 5 years.