When you work for yourself, there’ll be times where you might need to step away from earning for a prolonged period. This can be for many reasons - for example becoming a parent, having caring responsibilities or getting ill.
It can feel like you’re pressing pause on your working life during this period - income, schedule, and often, pension contributions.
A study from the Institute of Fiscal Studies (IFS) shows that just over 20% of self-employed workers have a private pension, as opposed to 80% of PAYE employees. This imbalance gets worse during these periods away from work. Depending on the scheme, some employees’ pension contributions can often continue during statutory leave. Unfortunately, business owners and freelancers don’t have this safety net.
But with some smart strategies, you can keep your pension ticking over even when your business is taking a hiatus. Here are a few things to keep in mind.
1. Consolidate old pensions
If you’ve previously been employed, you might have multiple old pensions sitting idle. A break is a good time to consolidate them all into one pot, which PensionBee can help with. This has a number of benefits. Firstly, it can be a helpful way to simplify your finances when during a personal break. Having just one pot, and one set of login details, cuts down on unnecessary admin and paperwork. It also makes it easier to see how much you’ve saved, how well your fund is performing and project how much you may have at retirement.
It’s also worth remembering that different pensions charge different fees. Some older schemes may have higher charges that quietly eat into your savings. Bringing these together into one pot with a competitive charge can keep your pension growing and prevent you from spending money on multiple fees.
Finally, it ensures you know exactly what type of investment fund all your pensions are going into. Make sure this aligns with the level of risk you’re comfortable with, especially during a time where your income might be drying up.
2. Set up flexible contributions
Try to make some small contributions via Easy bank transfer, even when you’re not getting any income. Not only is this good practice, but it means you can continue to benefit from tax relief. Most UK taxpayers get tax relief on their pension contributions, which means that the government effectively adds money to your pension pot. Usually basic rate taxpayers get a 25% tax top up; meaning HMRC adds £25 for every £100 you pay into your pension making it £125. You can receive pension tax relief on any personal contributions that you make, up to 100% of your annual salary, capped at a maximum of £60,000 (2025/26).
Higher rate and additional rate taxpayers can then claim an additional 25% and 31% tax top up via their Self-Assessment respectively. You’ll only be able to claim back this tax relief from the last four years though.
Providers like PensionBee enable you to set up flexible contributions on your terms – for example £50 in one month, and perhaps only £20 the next. You can also pause if you need to, but it’s worth contributing even modest amounts if you can. It means you’ll still get tax relief that boosts each payment and over time, these contributions benefit from compound interest, helping to build a more secure retirement.
3. Review and redirect unnecessary expenses
It’s a good idea to review your business and personal expenses ahead of a break - if you know you’re taking one. Could you cancel or pause even one unnecessary subscription? It might be worth redirecting that money into your pension instead. This enables you to benefit from both the pension contribution and the tax relief, without any additional money leaving your account each month.
For example, you could cancel a £15 monthly subscription and use that as your pension contribution while you’re not working. Over the course of a year, that gives you £180 in contributions – and if you’re a basic rate taxpayer, HMRC will then add another £45 (in the form of tax relief) at no cost to you. (And remember, higher and additional rate taxpayers can claim more.) It’s another example of being smart with your existing outgoings to keep building a retirement pot.
You can use the PensionBee Tax Relief Calculator to break down how much tax relief could be added to your pension pot. It’ll also tell you whether or not you may need to file a Self-Assessment tax return to claim a portion of it.
4. Use windfalls and business profits strategically
If your break is pre-planned (such as expanding your family), you can be strategic with any money you’ve previously earned.
It might be that you don’t have the capacity to contribute while you’re not working, but you enjoyed an especially profitable year beforehand, or received a one-off windfall from a big project.
You could consider putting a lump sum into your pension. This allows you to take a breather from contributions while you’re not earning money, but still end up with a pension pot that looks much like it would’ve if you’d kept working and contributing. Just remember to stay within your annual allowance so you can benefit from tax relief when contributing a lump sum.
5. Mark key pension dates in your calendar
If possible, set up some reminders during the time you’re on a break. An obvious one is the beginning of the tax year (5 April) and end (6 April) – this is also the last chance to use your annual allowance. You may also want to build in quarterly, light-touch check-ins just so you can stay on top of how your pension savings are doing.
If you know the date you’ll be open for business again, this is a good time to make an assessment on your future contribution levels. As mentioned, providers like PensionBee allow you to be flexible on a month-by-month basis, but it’s good to have an overall goal in mind before you start earning again. You can use the PensionBee Pension Calculator to see how adjusting contributions can make an impact.
6. Keep calm and carry forward
Finally, it’s important not to panic if you think your pension contributions will be low for a while. Remember you can benefit from the carry forward rule. This allows you to contribute up to three tax years of unused annual allowances and still benefit from tax relief. This can be invaluable for when your income picks back up.
So, if you’ve not contributed much in 2025/26 due to a break from work – this allowance can be moved into 2026/27 to boost that year’s savings.
Time off might pause your work, but it doesn’t have to pause your pension saving. By applying these tips, you can ensure your pot stays resilient and flexible even while you’re away from work – giving you the same peace of mind employees have.
Nilesh Pandey is a Freelance Writer who’s been trusted by businesses and entrepreneurs across the globe. Over the last decade, he’s worked with companies in industries such as tech, private equity and pharmaceuticals, while seeing his words appear in national newspapers and international speeches. Nilesh is also a regular Writer for Your Business magazine.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
