73% of UK’s self-employment sector have no pension

Monday 31 July 2017

Some 73 per cent of Britain’s self-employed workforce have no pension, a new study has indicated.

Research from the Drewberry Wealth and Protection Survey found that, even though more people are starting to work for themselves, the average self-employed professional is falling behind in terms of their earnings and pension.

Some 51 per cent of those who are saving for retirement are not aware of what is in their pension. As well as this, among those who do not know the amount they contribute to their pension, 91 per cent put in ten per cent or less of their take-home pay into their savings.

With regard to those who knew when their personal pension began, 34 per cent of self-employed professionals in the UK did not start saving money until they were 36-years old. When it comes to full-time workers, this figure fell to 11 per cent. 

Tom Conner, director of Drewberry, said: “This year’s results highlight the pressures that are being exerted by the on-going ‘Uberisation’ we’re seeing in the UK’s employment market.

“Last year our survey clearly identified that the growth of the ‘gig economy’ meant that Britain’s self-employed were fast becoming a ‘financial underclass’. This year’s results show that nothing has arrested the decline.”

Mr Conner went on to say that retirement savings are too low down the list of priorities for the self-employed, with the research showing that just 27 per cent of those working for themselves have personal pensions. 

He highlighted the importance of starting pension savings early, as doing so can make a huge difference to savings. 

“In a recent exercise, we calculated that someone who starts a pension at age 25 will have around twice the pension pot at age 65 as someone who waits until they’re 35 and four times as much as someone who doesn’t start until they’re 45 years old,” Mr Connor noted.

The financial obligations that come with self-employment can be extremely daunting to those who are new to working for themselves, which is why specialist accountants can be so vital.

These experts can ensure rules such as IR35 are met appropriately and advise independent professionals on how they can maximise the potential of their business.

As well as helping self-employed workers to meet taxation rules, accountants can help with financial advice such as budget forecasting and identifying how much money to put away for taxes.

By Victoria McDonnell

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