Looming pensions saving crisis on the horizon
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)
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