Loom­ing pen­sions sav­ing cri­sis on the hori­zon

Leek Post & Times - - BUSINESS WEEKLY - From Brian Mel­lor Fi­nan­cial Ser­vices

THE num­ber of peo­ple run­ning their own busi­nesses has soared since the fi­nan­cial cri­sis, with a sig­nif­i­cant num­ber be­ing set up by some­one aged over 50.

But an un­healthy num­ber of self­em­ployed work­ers in the UK do not cur­rently save into a pen­sion.

New re­search has high­lighted that self-em­ployed work­ers are head­ing to­wards a pen­sion sav­ing cri­sis as they can­not af­ford to save for their re­tire­ment. Start­ing your own busi­ness and be­com­ing self-em­ployed is ex­cit­ing. But be­ing your own boss can have some chal­lenges – sav­ing for re­tire­ment is cer­tainly one of them.

The na­tion­wide study found that more than two-fifths of those work­ing for them­selves ad­mit they do not have a pen­sion, com­pared to just four per cent of those in em­ploy­ment. A key rea­son is that 36 per cent of the self­em­ployed say they can­not af­ford to save for re­tire­ment.

Self-em­ployed work­ers now make up 15.1 per cent of the UK work­force, with more than 4.8 mil­lion peo­ple work­ing for them­selves, but the re­search found they are head­ing for a less com­fort­able re­tire­ment, with many not plan­ning to stop work.

Around one in three say they will be re­ly­ing en­tirely on the State Pen­sion worth around £8,545 a year to fund their re­tire­ment, while 28 per cent will be re­liant on their busi­ness to pro­vide the in­come they need.

Self-em­ployed work­ers are savers, but the re­search found they are more fo­cused on day-to-day emer­gen­cies than the long term of re­tire­ment. Two thirds (64 per cent) of the self­em­ployed save to build up a safety net in case of an emer­gency, in com­par­i­son with 57 per cent of those in em­ploy­ment.

Just one in 10 self-em­ployed peo­ple see a fi­nan­cial ad­viser reg­u­larly, de­spite hav­ing po­ten­tially more com­plex re­quire­ments than some­one in em­ploy­ment.

One in five are not con­fi­dent with money and fi­nan­cial mat­ters, while a quar­ter worry that they do not know enough about money.

All this adds up to an ed­u­ca­tion gap when it comes to the im­por­tance of pen­sions for the self-em­ployed, as 20 per cent ad­mit they do not take pen­sion sav­ing se­ri­ously as they do not think it ap­plies to them.

Sav­ing for re­tire­ment is tougher when you are self-em­ployed, as there is no one to or­gan­ise a pen­sion for you.

On top of that, self-em­ployed work­ers of­ten don’t have a reg­u­lar in­come, so many will fo­cus on setting aside money as a safety net if they can­not work. Oliver Mel­lor Dip PFS, BA (Hons)

In­for­ma­tion based on our cur­rent un­der­stand­ing of tax­a­tion leg­is­la­tion and reg­u­la­tions. Any lev­els and bases of, and re­liefs from, tax­a­tion are sub­ject to change. Tax treat­ment is based on cir­cum­stances and may be sub­ject to change in the fu­ture.

Although en­deav­ours have been made to pro­vide ac­cu­rate and timely in­for­ma­tion, we can­not guar­an­tee that such in­for­ma­tion is ac­cu­rate as of the date it is re­ceived or that it will con­tinue.

No in­di­vid­ual or com­pany should act upon such in­for­ma­tion with­out re­ceiv­ing ap­pro­pri­ate pro­fes­sional ad­vice af­ter a thor­ough re­view of their par­tic­u­lar sit­u­a­tion.

We can­not ac­cept re­spon­si­bil­ity for any loss as a re­sult of acts or omis­sions.

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