How to save and plan for retirement as a plumber

Whether you are employed as a plumber by a large company or you’re a self-employed plumber with your own business, you need a way to fund your life once you stop working. So, let’s cut through the jargon and find out how you can save and plan for retirement as a plumber.

When can I retire as a plumber?

You can currently start receiving State Pension benefits once you reach 66 years of age. However, the limit is due to increase gradually from May 2026 and by 2028, you will need to be 67 before you’re eligible for a State Pension. 

That said, there is no set-in-stone age when you have to retire, particularly if you are self-employed. 

You could choose to continue working into your 70s or, if you have the necessary financial stability, you could stop working in your 50s or even earlier.

That said, plumbing can be a physically demanding occupation, so you might need to start picking and choosing the jobs you do as you get older.

If you are a member of the Plumbing Industry Pension Scheme, the minimum age at which you can start receiving benefits is 55 (rising to 57 in 2028) unless you become unable to work due to your health, in which case you can claim the benefits earlier.

How should I plan for retirement?

There are lots of ways to save for retirement as a plumber, including via business savings accounts and tax-free cash ISAs or stocks and shares ISAs.

However, for most people – including plumbers - the best way to save for retirement is in a pension scheme.

What is a pension?

A pension is an investment-based savings pot into which you make contributions, usually monthly, with the aim of building up a stash of money you can draw on in retirement. 

There are lots of different types of pension schemes, some of which are only for employees and some of which are aimed at self-employed workers.

Similarities between the schemes include:

• You generally receive tax relief on your pension contributions (or in other words a refund of the tax you paid on this portion of your income, at least at the basic rate of 20%)

• You can only withdraw the funds when you reach a certain age, usually at least 55 (unless you experience extenuating circumstances such as developing a terminal illness before that age)

• Your contributions will be invested in an investment fund managed by your pension provider, although some types of pensions give you greater control over the underlying investments

How can I save for retirement as a plumber?

How best to save for retirement is not really linked to the type of work you do. However, it will depend on the way you earn money.

If, for example, you are employed as a plumber working for a company, the best option is probably to pay as much as you can into your workplace pension.

All employers in the UK are obliged to enrol their employees into a pension scheme into which they contribute as well as you (subject to certain conditions).

By increasing your contributions to the scheme, you can often boost the amount you receive from your employer—a win-win situation!

Self-employed plumbers, however, will have to take matters into their own hands to start building up a pension savings pot.

How does a pension work for self-employed people?

If you’re self-employed, you’re entitled to the State Pension in the same way as anyone else. 

To qualify, you’ll need at least 10 years of National Insurance payments to receive any State Pension and at least 35 qualifying years of payments to receive the full State Pension payment, currently £221.20 a week.

However, as this is unlikely to be enough to live on comfortably, it’s wise to pay into a private pension too.

With a private, or personal pension, you choose where your contributions are invested from a range of funds offered by the pension provider.

The provider then claims tax relief (at the basic rate) on your behalf and adds it to your pension savings (up to your annual allowance, currently £60,000, or the level of your salary, whichever is lower).

How much you get back depends on how much you pay in, how well the underlying investments perform and the amount of pension charges you pay.

You can choose between three main types of pension scheme:

• An ordinary personal pension that works as described above and allows you to choose between a range of investment funds

• A Stakeholder pension, which is a simplified scheme that generally comes with lower charges

• A SIPP (Self Invested Personal Pension), which requires greater input from you and often offers a wider range of investment options

Top tip!

If you're a director of a limited company, you can make both employer and individual contributions to your own director’s pension. There are tax breaks available but it’s best to consult a financial adviser to work out the best option for you. 

How much might I need to save to retire?

Current figures put the annual cost of a comfortable retirement at around £43,000, for which you would need a pension pot approaching £900,000 in value. So, it’s best to start saving as soon as you can!

In reality, however, your retirement income can also be drawn from a range of alternative sources, including rental property income, downsizing your family home, or continued earnings should you choose to continue working part-time.