With the most recent figures from the Office for National Statistics (ONS) reporting a boom in the number of self-employed workers, pension experts are calling for reforms on how they prepare for retirement. At the end of September 2019, the ONS announced there were 4.96 million self-employed workers, up 4% (195,000) on the previous year, but analysis shows only 14% of these are likely to be saving for retirement.
Stuart Price, Partner and Actuary at Quantum Advisory, admits the small figures of those saving for a retirement are concerning, and the government needs to act in order to stop a future pension crisis for the growing sector of the workforce. Stuart said: “Technology has certainly made the option of self-employment more accessible, and the flexible working means it is attractive to many. However, when people do choose this career path, it means managing all their own finances; from accounts, invoices, taxes, and a pension; the latter of which can often be overlooked or continually put on hold.
The workers themselves can’t be blamed; there is such little information or education out there and there are no rules stating they must save into a pension, or if they do, how much or how often.
The auto-enrolment scheme has been hugely successful in encouraging the majority of workers to pay into a workplace pension, and it is high time the self-employed are included in this and are given the chance to receive some benefit similar to the employer contribution.
An option for the government to consider is to offer further tax breaks when self-employed workers invest into a personal retirement plan to balance out the current inequalities.”
Stuart Price, Partner and Actuary