Survey finds contractors concerned about pensions

Monday 7 September 2015

The Association of Independent Professionals and the Self-Employed (IPSE) has published a new survey that reveals the ways that contractors are planning for life after work.

Alarmingly, 54.4 per cent of the respondents said that they were uncertain about how they will pay for their retirement. In addition to this, 37.3 per cent are not able to pay into a pension fund, and 9.1 per cent don’t know how to save for retirement.

These figures are a significant cause for concern, as all workers should be able to afford a comfortable retirement, regardless of whether they are employed or work for themselves.

However, there are a number of different approaches to retirement saving among self-employed people. Unsurprisingly, the most popular way of putting money aside for retirement is to use a pension fund, which was the choice made by 63.2 per cent of those surveyed.

Instead of taking the well-established route, a third (33.3 per cent) had decided to invest in property to create their own retirement income. In addition to this, 28.9 per cent have chosen to buy stocks and shares to build up their pension. Of course, these approaches have risks involved, as both types of investment can go up and down in valuable, but can make up a useful part of a well-balanced portfolio.

IPSE’s chief executive Chris Bryce said: “This survey shows the difficulties the self-employed face when planning for their future. We know this isn’t easy, and those working for themselves have tough decisions to make about their pensions and future financial situation.

“The nature of freelancing means you can’t always be on assignment and be able to set aside a regular amount for your future. You don’t have an employer contributing to your pension, so saving isn’t as straightforward. This is why we need innovative solutions to help the self-employed feel more financially secure over their future.”

He added: “With the economy moving in the right direction after a difficult few years, it is important that the self-employed feel financially safe if they are to continue to lead the way towards a strong and flexible economy. Therefore we urge the Government to act sooner rather than later.”

Mr Bryce suggested that the government should work with industry bodies to make sure that there are a good range of competitive and flexible pensions to suit the self-employed.

If you haven’t made any saving plans for your retirement, the best thing to do is to talk to a specialist contractor accountant, particularly if you’re not sure how best to manage the process. They will be able to look at your situation and help you to choose the best pension product for your needs, as well as establishing how much you should be paying in to get the retirement funding you want.

By Victoria McDonnell

Get in touch

Please select your type of enquiry:

Brookson on Twitter