Running your own business tends to absorb every spare hour and every spare pound, which can make retirement feel like a problem for future you. Research from Which? (1 March 2026) found that people who have spent most of their working life self-employed are three times more likely not to have a private pension than those who were mostly employed – a gap that can leave business owners with far less of a safety net than they realise.
It’s a pattern we see often here in Dorset, where small and family-run businesses make up such a significant part of the local economy – from Poole’s marine and tourism trades to independent retailers, tradespeople and consultancies across Bournemouth and the wider county. Reinvesting profit back into the business rather than into a pension can feel like the obvious choice when you’re building something, but it’s worth making sure your own retirement isn’t left entirely dependent on it.
Why pensions often slip down a business owner’s priority list
There are a couple of understandable reasons pensions get overlooked. The first is simply that income isn’t steady – the same Which? research found that four in ten self-employed workers cite fluctuating earnings as their biggest barrier to saving for retirement, since it’s harder to commit to regular contributions when this month’s income is a mystery. A financial planner can help build a contribution pattern around that unpredictability, rather than expecting a fixed amount every month regardless of how the business is doing.
The second reason is more of an assumption than a barrier: many business owners plan to let the business itself fund their retirement, whether through an eventual sale or by simply continuing to draw an income from it for as long as possible. That can work out, but it isn’t something you can bank on. You might struggle to find a buyer prepared to pay what you had in mind, or ill health might force an earlier retirement than planned. Without a pension alongside the business, either of those situations can leave you short.
This is exactly the kind of question a cashflow model can help answer – working with a financial planner to map out, for instance, what a business sale would realistically need to achieve to fund your retirement, versus how much a pension contribution now could provide as a guaranteed base income regardless of how the sale goes. The results of a cashflow model can’t be guaranteed, but they can bring welcome clarity to what is otherwise a guessing game.
Three practical reasons to have a pension alongside your business
Employees are now automatically enrolled into a workplace pension, but as a business owner or self-employed worker, opening one is entirely down to you. Here’s why it’s worth doing.
A separate pot gives you a genuine fallback
Keeping some of your wealth in a pension, separate from the business, means your retirement doesn’t depend entirely on how the business performs or whether a sale goes to plan. It’s worth knowing that pension savings are normally locked away until age 55 (rising to 57 from 2028), so a pension works best alongside other savings and investments that can cover shorter-term goals in the meantime.
Pensions remain one of the most tax-efficient ways to save
Contributions usually attract tax relief at your rate of Income Tax – effectively, some of the tax you’ve already paid is added back into your pension. Basic-rate relief is typically added automatically by your pension provider, while higher- and additional-rate taxpayers need to claim the rest through Self Assessment. Despite this, the same Which? research found that nearly three-quarters of self-employed workers had no idea their contributions qualified for tax relief at all – which, if it applies to you too, could mean you’re missing out on a straightforward boost to your retirement savings.
Growth on investments held within a pension is also free of Capital Gains Tax, which isn’t necessarily the case for money held outside a tax-efficient wrapper.
Contributions can work in the business’s favour too
Paying into your pension isn’t only good news for you personally – employer pension contributions can often be treated as an allowable business expense, reducing the business’s taxable profit and, in turn, its overall tax bill.
Talk to us about your retirement plan
As financial planners based in Poole, we work with business owners across Dorset – from Bournemouth to the Purbecks – who want their retirement plan to stand on its own, whatever happens with the business. If you’d like help building a plan that works alongside your business rather than depending entirely on it, get in touch. We can help you weigh up your options, including opening a pension, and put together a plan tailored to your goals.
This article is for general information only and does not constitute advice. The information is intended only for individuals.
All information is correct at the time of writing and is subject to change in the future.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The Financial Conduct Authority does not regulate cashflow modelling.