Right carry-on for retirees
ONE in three self-employed workers will have to carry on working far into later life because they have not saved a single penny for retirement.
More than 1.3 million people could be forced to work as long as they can, because they only have the state pension to fall back on.
The pandemic has made a bad situation worse, as more than half of those who work for themselves have lost income as a result, almost double the national average, according to the latest Scottish Widows Retirement Report.The Government launched the Self-Employment Income Support Scheme (SEISS) to help self-employed workers, but many fell through the gaps as successful applicants needed to have worked for themselves for at least two years.
Up to three million got no Covid-19 financial support, according to ExcludedUK. As a result, one in seven went more than six months without any income at all.
One in three are saving nothing at all for their future, while a further third are saving less than they need for a comfortable retirement, the research shows.
Pete Glancy, head of policy at Scottish Widows, said too many selfemployed never get started with their savings: “Covid fallout has left many struggling to make ends meet, let alone save for their future.”
More than a quarter of selfemployed workers are now considering returning to employed work because of the challenges they face, Glancy said.
Digital consultant JT Joseph, 37, has worked through her own limited company for six years, contracting out her services around the world, until the pandemic struck.
She earned almost no income between June and October last year, as all her contacts were put on hold.
Worst, her savings had already been depleted because she took three months off work to recover from surgery in 2019.
JT, from Cambridge, started a new contract that November but the pandemic struck before she had rebuilt her savings: “I had no income but needed to pay bills to maintain my business, such as accountancy costs and corporation tax.”
She was ineligible for SEISS, being a company director, and also could not benefit from furlough or council Covid support schemes.
“I took out a loan under the Bounce Back Loan Scheme, but I’m now paying this back too,” JT added.
With daily life and financial struggle it is too easy for the self-employed to put pension savings on hold.
The self-employed do not benefit from the workplace auto-enrolment scheme, that has granted company pensions to more than 10 million employees since 2012.
They must save under their own steam instead but too many are failing to put away any money at all.
Alan Thomas, UK chief executive at Simply Business, said few have been hit harder by the pandemic, with livelihoods on the line.
He called on Chancellor Rishi Sunak to offer support in today’s Budget: “For the UK to recover from the effects of the pandemic, we need small businesses to bounce back.”