The Press and Journal (Aberdeen and Aberdeenshire)

Warnings about savings deficits


A massive savings deficit among the self-employed is “storing up real trouble”, the Federation of Small Businesses (FSB) has warned.

It comes after the UK Government Office of Tax Simplifica­tion (OTS) called for a full review of the independen­t savngs account (Isa) landscape, saying take-up of the lifetime Isa (Lisa) among the self-employed had been disappoint­ing.

OTS also highlighte­d that only 17% of selfemploy­ed people have a private pension, compared with 78% of employees.

FSB chairman Mike Cherry said: “The huge savings deficit among the self-employed is storing up real trouble for the future.

“Some had hoped that the Lisa would crack the problem. Clearly, that’s not been the case.

“It’s good to see the OTS noting our recommenda­tion that the age limit for new Lisa contributi­ons should be increased.

“Because selfemploy­ed incomes often fluctuate throughout the year, early exit penalties can put them off taking out a Lisa.”

Mr Cherry added: “If you’re not always sure where your next piece of work is coming from, not having ready access to your savings is a daunting prospect.

“Improving the Isa landscape will go some way to improving savings rates among the self-employed.

“Over the longterm, though, more meaningful interventi­on is needed to ensure the self-employed are ready for retirement.”

Mr Cherry said an OTS proposal to remove the need to report dividend income that falls below the allowance threshold “makes sense”.

“Early exit penalties can put them off taking out a Lisa”

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