As a self-employed person you still receive the state pension. What you miss is the second pillar: the occupational pension an employee accrues automatically.
At €40,000 of annual spending and stopping at sixty, that means €227,975 of extra wealth you must build yourself. Stopping at sixty-five, it's €277,367.
Here's the point most self-employed articles miss: at lower spending that gap isn't smaller. Proportionally it's larger.
The gap in euros
The same person, with and without a pension, stopping at sixty:
| Annual spending | Employee (pension €12,000) | Self-employed (pension €0) | Difference |
|---|---|---|---|
| €30,000 | roughly €403,000 | €530,037 | €127,975 |
| €40,000 | €430,062 | €658,037 | €227,975 |
| €50,000 | €680,062 | €908,037 | €227,975 |
At higher spending the euro difference stays constant. That isn't coincidence: the gap is the present value of the missing pension amount, and that amount doesn't change with your spending.
Why the gap weighs more at lower spending
Here's this article's find.
Set the same gap against what an employee already needs:
| Spending | Pension gap as a share of the employee's target |
|---|---|
| €30,000 | 127% on top |
| €40,000 | 53% on top |
| €50,000 | 34% on top |
Anyone living modestly and spending little already has a small target as an employee. The pension gap is a fixed amount, so it weighs proportionally heavier against a small target. At €30,000 of spending the gap exceeds the entire employee target.
That's counterintuitive. You'd expect frugal living to shrink the problem. The pension gap itself doesn't shrink with it, making it relatively heavier for self-employed people with modest spending than for those who spend more.
Why it's exactly this size
The gap isn't arbitrary. It's exactly the present value of the pension amount you miss, calculated from your stop date.
| Stopping at | Present value of €12,000 missed pension |
|---|---|
| 55 | €187,379 |
| 60 | €227,975 |
| 65 | €277,367 |
Notably: the later you stop, the larger the wealth gap needed at that moment. That seems contradictory until you consider why: at a later stop date the period during which the missing pension would have saved you money is longer, and that longer period must come entirely from your own wealth.
For someone stopping at sixty-five with a €277,367 pension gap: that's nearly three hundred thousand for the absence of an occupational pension alone, separate from everything else.
How to close the gap
Three routes, differing in flexibility and tax treatment.
Investing in an ordinary brokerage account. Fully flexible: accessible, sellable, or repurposable at any time. Falls under ordinary wealth tax. No deduction on contribution, no fiscal restriction on withdrawal.
An annuity. A tax-facilitated route specifically for pension building, with its own annual allowance you may contribute. Contributions are deductible under conditions, and the payout is taxed later. That's a subject with its own calculation rules and its own annual allowance calculation, falling outside this article. Your accountant or a pension adviser can calculate that for your specific situation.
A combination. Most self-employed people who address this deliberately use both: part in an annuity for the tax advantage, part freely invested for flexibility.
Which ratio suits your situation depends on your tax position and your need for flexibility before your pension date. That's precisely why an annuity isn't the first step: first you must know how much you need, and only then can you sensibly choose the form.
How much per month that requires
To close a €277,367 gap by sixty-five, starting at thirty-five:
| Contribution per month | Target reached at |
|---|---|
| €100 | 94 (too late) |
| €200 | 79 |
| €300 | 71 |
| €500 | 62 |
This is only the pension gap, so it's on top of what you already contribute towards your ordinary FIRE target. At €100 or €200 a month you don't make it in time, and that's precisely why many self-employed people are unknowingly letting a gap grow.
Calculate your own figure with your own reference age and target percentage; €12,000 is an example and says nothing about what an employee in your sector actually accrues.
What employees have and you must arrange yourself
Two things often forgotten because they come automatically for employees.
Survivor's pension. An employee has standard insurance paying the partner on death before the pension date. As self-employed you don't, unless arranged separately. How large that amount typically is and why it's so often underestimated is in the article on survivor's pension.
Disability cover. Employees are insured through their employer and social security. As self-employed you must arrange it yourself or knowingly carry the risk. That's insurance comparison and falls outside this article, but it belongs on the list of things to arrange before optimising the rest.
How this affects your stop date
The pension gap doesn't just shift your target; it shifts when you can stop.
At €40,000 of spending and the same savings rate, the difference between an employee and a self-employed person with the same income and discipline quickly runs to several years. How to calculate your own stopping age based on your wealth and contributions is in the article on calculating early retirement.
That's no reason for despair. It's a reason to include the gap explicitly in your calculation rather than calculating as though you have a pension that doesn't exist.
How Gylder fits in
The problem for most self-employed people isn't that they don't save. It's that their savings, their annuity and their investments sit in separate pots without one total picture.
Gylder totals your wealth daily across bank, broker, crypto, precious metals and your property with the mortgage underneath, regardless of how many pots it's split across. Your spending is categorised automatically, so your annual figure rests on measurement.
With the bridge calculator you enter your state pension, and leave the occupational pension field at zero, or enter what you've already built in an annuity or free wealth for that second pillar. That gives you your own target, including the gap an employee doesn't have.
What this doesn't tell you
€12,000 is an example. What an employee in your sector and income level actually accrues varies considerably. Check the national pension register for comparable roles, or ask a peer.
Annuities have their own calculation rules. The annual allowance, the tax deduction and the tax on payout are a separate subject with rates that change. This article covers how much you need, not how to contribute most tax-efficiently.
The real return is an assumption. At 3% rather than 4%, every figure here is higher.
This isn't advice. The split between annuity and free wealth, and whether and how to arrange disability insurance, depends on your personal situation.
Frequently asked questions
How much pension should I build myself as self-employed? That depends on what a comparable employee accrues and your stopping age. At an example pension of €12,000 and stopping at sixty, that's €227,975 of extra wealth.
Why is the pension gap relatively larger at low spending? Because the gap is a fixed amount that doesn't move with your spending. Against a small target, a fixed gap weighs proportionally heavier.
Should I take out an annuity? That's a choice with its own tax rules falling outside this article. Establish how much you need first, then you can sensibly choose between an annuity, free investing, or a combination.
How much should I set aside monthly? To close a €277,367 gap from thirty-five to sixty-five, roughly €500 a month, on top of what you already contribute towards your ordinary target.
What else am I missing as self-employed? Survivor's pension and disability cover are standard for employees and must be arranged yourself, or the risk knowingly carried.