It’s estimated that 20 million people could benefit from the government’s new Pension Schemes Bill. The bill aims to simplify pensions and help working people to better plan for their retirement. Yet it doesn’t address the huge gap between the self-employed and their pension pots. Here we look at what the bill promises, what this means if you work for yourself, and how you can boost your pension.
What’s the Pension Schemes Bill?
The Pensions Schemes Bill is part of the UK government’s wider ‘Plan for Change’ programme. It aims to:
make the pensions industry easier to understand;
encourage more people to save; and
help people take an active role in managing their pension pots.
The government says around 20 million working people could see their pension boosted by up to £29,000 by the time they retire, thanks to the reforms. These include consolidating small pension pots, driving down overall costs and ensuring all pension schemes are providing value for money to investors.
The bill had its second reading in parliament on 7 July 2025 and is expected to become legal in 2026.
What’s in the Pension Schemes Bill?
There are several reforms suggested in the new bill including:
Collating small pensions - pots worth £1,000 or less will be consolidated into one pension scheme.
Creating a ‘value-for-money’ framework - preventing savers from being stuck in underperforming pension schemes.
Changing defined benefit (also known as ‘final salary’) pensions - trustees of some defined benefit pension schemes will be able to reinvest this in the UK economy.
Redefining ill health - updating the definition of a terminal illness so that when someone’s diagnosed, they can receive payments at an earlier stage.
Removing restrictions around the Pension Protection Fund (PPF) - reducing its annual levy.
Giving The Pensions Ombudsman (TPO) legal standing again - leading to quicker customer journeys and shorter waiting times for pensions overpayment cases.
Creating new rules for defined contribution pensions and Local Government Pension Scheme (LGPS) - enabling them to operate at a ‘megafund level’. This means they’ll be able to invest in a wider range of assets and drive down overall costs for savers.
Chief Business Officer UK at PensionBee, Lisa Picardo: “Through our Invisible Workers campaign, we’ve also called for urgent reform to bring gig economy workers into the scope of Auto-Enrolment. These workers contribute significantly to the economy and represent a growing population, yet are too often overlooked by outdated legislation.”
How will it help self-employed workers?
Despite identifying the self-employed as an ‘at-risk group’ in their new Pensions Commission report, the bill’s been criticised for the lack of support for those in untraditional roles. For example, business owners, freelance workers and contractors.
PensionBee’s Invisible Workers campaign found 57% of gig workers in the UK can’t afford to save into a pension. This includes freelancers, unpaid carers and other non-traditional roles. Alongside an affordability issue, it found that one-in-three either wouldn’t know where to start or found pensions too complicated.
The campaign is calling for more inclusive pension reforms such as bringing gig workers into the scope for Auto-Enrolment. Under Auto-Enrolment law, eligible employees must be enrolled in their workplace pension scheme. It’s been successful in helping more workers save for retirement. However no such legislation exists for the self-employed.
If you work for yourself and are wondering how to get started with retirement planning or want to give your pension a boost, here are four things you can do today.
Chief Business Officer UK at PensionBee, Lisa Picardo: “Retirement shouldn’t be a luxury. It’s a right earned through a lifetime of contribution - whether through freelance work, self-employment or unpaid care.”
4 ways self-employed workers can boost their pension
1. It’s never too late to start - if you’re a small business owner, you may see your company as your retirement nest egg. But there are many benefits to saving into a pension alongside building your business. Remember, the earlier you start saving into a pension, the more opportunity it has to benefit from potential investment growth and compound interest.
2. Take advantage of tax relief - whether you pay into a Self-Invested Private Pension (SIPP) or a self-employed personal pension (like the one offered by PensionBee) you could benefit from tax relief on your contributions. Usually basic rate taxpayers get a 25% top up. This means when you pay £100 into your pension, it’s topped up with £25, bringing the total contribution to £125. If you’re a higher or additional rate taxpayer, you could be eligible for more.
3. Make contributions from your limited company if you can - if your business is structured as a limited company, you may be able to make employer contributions into your self-employed pension. These can be alongside your own personal contributions. Plus, they can usually be treated as a business expense and offset against your corporation tax bill.
4. Check fees and performance - make sure you’re aware how much you’re paying in pension fees and also how your investments are performing. You can do this by checking your annual pension statement, online account or asking your provider for the fund factsheet. It’s a good idea to review your pension at least once a year. Look at things like the risk profile, your contribution amount and the performance of your fund. You might find you need to review more often or as your circumstances change, as with self-employment your earnings may fluctuate.
For more self-employed pension tips, read these blogs from PensionBee.
Rebecca Goodman is an award-winning Freelance Journalist. For the past 15 years she’s been working for national newspapers and magazines including The Guardian, The Independent, The Times, The Mail on Sunday, This is Money, and MoneySavingExpert. Her work is driven by wanting to help people to make their money work harder, exposing wrongdoing in the financial services industry, de-mystifying money issues, and sharing great easy money-boosting tips.
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.
