Lonsdale Services recommend the self-employed save into a pension after a report earlier this year from the Office for National Statistics revealed that 45% of self-employed workers aged between 35 and 55 have no private pension.
According to the survey the self-employed make up 15% of the whole UK workforce following the growth of the gig economy. However, it is not just millennials who are failing to save into a pension as 30% of self-employed workers aged over 55 have no private pension either.
‘These self-employed workers who are not saving into a private pension may face a big shock in retirement. It is worrying that 45% of self-employed workers between 35 and 55 have no private pension. This compares to just 16% of people who are employed. The trend is also alarming as since 2008 the number of self-employed workers saving into a pension has fallen from 40% to just 25%. We recognise the monetary pressures that millennials are under as they are paying off student debt and want to save for a home. Even if they were self-employed they may prefer to re-invest any profit back into their business, but our financial advice is the earlier you can save towards a pension the better your standard of retirement. If you are a millennial saver and new to investing review our Beginners Guide to Investing for financial information about how to save.’
'We can see from the figures that the majority of the employed workforce has a pension set up, and auto enrolment has encouraged this. However, not only do the self-employed not benefit from this but the growth in the gig economy and zero hours contracts has made it difficult for them to save. Auto enrolment is a great way for younger workers to begin saving for their retirement. However this doesn’t help anyone who is self–employed or the director and employee of a limited company. The onus is therefore on the self-employed to think about making provision for retirement and getting financial advice. Speaking to an Independent Financial Adviser would be a good start, they can work with you to understand your financial situation and your objectives. They can provide projections to show how even making modest contributions from an early age could provide you with a meaningful pension when you reach retirement age. Not everyone is aware of the changes that have been made to how an individual can access their pension when they reach retirement. Pensions now offer an enormous amount of flexibility, which can allow an individual to tailor their income in retirement to their needs. This flexibility, plus the tax advantages they provide both when making contributions and as they grow makes them an excellent way to save money for the future.’
For more information read: Howard Goodship, chartered financial planner Ringwood - Understanding your investment choices; Aaron Abraham, independent financial adviser Harpenden - Millennials unsure how much income they need
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