TPAS launches campaign to get self-employed saving

Wednesday 24 January 2018

Many people become self-employed to increase the amount of money they take home. Working for yourself means the money you make goes straight to you, after all, rather than going through your boss. However, that doesn't mean you can just neglect your financial responsibilities, of which your pension is one of the most important.

Saving money for your retirement is vital if you want to be reaping the benefits of your self-employment into old age. This is why The Pensions Advisory Service (TPAS) has launched a new campaign to raise awareness of this issue among freelancers, in an attempt to get more people to pay into a pension.

According to the organisation, less than one in three self-employed workers have a pension. This may be in part due to the fact that many people intend to set up a limited company and use it to fund their retirement; however, this is far from the whole case. Research from the Pension Policy Institute found that less than 20 per cent of freelancers intend to do this.

Michelle Cracknell, chief executive of TPAS, said: "Understandably, self-employed customers have pressures on their time running their own business so are more likely to concentrate on the more immediate financial requirements rather than pensions or long-term financial security. Yet the need for everyone to take responsibility for their retirement income is the same."

Pensions can be a very tax-efficient method of saving for retirement. If you pay contributions out of your earnings, for example, it will reduce your official income and therefore lower the amount of tax you have to pay.

Self-Invested Personal Pensions (SIPP) and Small Self-Administered Schemes (SSAS) can also be useful, as they can allow self-employed workers with business premises to use them as an investment. This means that every time you pay rent, you will be investing in your pension fund.

For those already running their own limited company, it is possible to pay employer pension contributions out of your salary or dividends. Again, this helps you save for the future while also reducing your tax bill.

If you're curious about saving for retirement and could do with some advice, get in touch with Brookson. As a specialist accountant for contractors, we are well-informed about the specifics of self-employment and can help you find the best ways of saving money and preparing for your retirement.

By Victoria McDonnell

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