So what are the alternatives to saving into Sipps?
Alternatives to Sipps
Experts highlight that it is important for self-employed people in particular to try to obtain the maximum state pension allowance.
Ms Owen says: “An individual should complete a BR19 form, available on the gov.uk website, so they can see how much they might expect to get as a state pension.”
An individual needs 35 qualifying years to get the full new state pension.
Ms Owen adds: “Self-employed people need to ensure they are getting tax relief on their pension contributions. If an individual is paying higher rate tax, they may need to fill out a self-assessment to claim back the higher rate tax they have paid.”
Ms Rutland believes Isas should also be considered as they are a tax-efficient way to save.
“Each year, everyone has a £20,000 Isa allowance which cannot be carried forward. Isas can either be held in cash or invested through a number of options including funds and shares,” she adds.
Other than Sipps, clients can open basic personal pensions and make regular or one-off contributions.
Steve Webb, director of public policy at Royal London says: “Younger self-employed people under the age of 40 may want to consider a Lifetime Isa as an alternative to a pension, especially if they are focused on saving for a house deposit.”
Auto-enrolment for the self employed?
Could auto-enrolment help the self-employed save for their pensions?
Steve Webb, director of public policy at Royal London, confirms: “Most self-employed people are excluded from automatic enrolment (unless they have a mixture of work as an employee and as self-employed) but there is no reason why a new form of automatic enrolment couldn’t work for the self-employed."
He adds: “The best way to do this would be through the tax return process which would catch most higher income self-employed people and could be used to ‘nudge’ them into pension saving.”
But Andy Chamberlain, deputy director of policy at The Association of Independent Professionals and the Self-Employed, thinks auto-enrolment is not the best solution for plugging the pension deficit for the self-employed.
“Auto-enrolment doesn’t and shouldn’t apply to the self-employed who want to remain independent of employment.”
Instead, Mr Chamberlain calls for more innovative products that work for people who are their “own boss".
IPSE suggested last year that the government should develop a ‘sidecar’ pension. The sidecar is designed to give the freelancer access to funds that they might need if business dips but once it reaches a certain point funds will go into a pension.
Mr Chamberlain adds: “This is something that the financial industry and government are still struggling to understand, although we have seen some progress in recent months.”