As a self-employed UK citizen you will still receive the UK state pension, but you have to make your National Insurance contributions directly yourself, instead of having them made through your employer. This can all be sorted out at the same time as you register with HMRC as a self-employed worker for tax purposes – it’s a different process but all such information can be found on the same page here. Normally you will pay Class 2 contributions, but if your income is above a certain point you move to Class 4. Class 2 is about £2.75 a week, usually paid quarterly.
So this gives you a basic pension, but you need a private arrangement as well, as the state pension isn’t large (though in future it should be better for self-employed people than it is at present – from 2016 there will be a flat rate of £144 a week based on current prices). Some people rely on savings or investments rather than a pension plan, but while this can have many advantages it’s risky too, especially now when the interest rate on savings is so low. So most people would put money into a pension plan, especially as pension savings are tax free whereas ordinary savings aren’t (unless you put them in an ISA, and it would be a good idea to look at those also). And you can’t take money out of your pension fund until you retire; a lot of people find this is the only way they can force themselves not to spend their money too early.
If you put ‘self employed 40 years old pension plan’ or similar in a search engine, you will find plenty of pension providers who want your custom, but to choose the best one you need to inform yourself first. A good place to start is Money Saving Expert. This has plenty of advice on pensions and savings generally so is worth exploring, but you may be particularly interested in some pages like the pension calculator. If you know roughly what your self-employed earnings are, you can use this to work out how much you need to save for your pension. Have this figure as a guide when you start looking at plans.
You have to be careful in choosing a plan as everyone promotes their own products. The best way is to start with a reliable guide such as Startups – click here for their ideas on the best self-employed pension plans. Lists like these will give you an idea of what’s on offer. Once you have seen some of the options, it’s probably best to seek professional advice. Many people do employ an independent financial advisor – be careful in choosing one, as their charges can be high and sometimes they are also trying to sell you financial services in which they have an interest. You may be able to manage with the free advice which is available from the UK government – this page gives you a clear overview of the different types of pension that you can go for, with links to explanations of personal pensions, self invested personal pensions (SIPPS) and others. The same website also offers advice on how to look around for the best deal, and where to find further free advice. Your local Citizens’ Advice Bureau may also be able to help with financial suggestions.
In the end, the best type of retirement plan for you will depend on how regular your income is, how much you are able to set aside regularly, what savings or assets you have and other factors. So it’s important to do lots of homework before committing to a plan. Good luck!