1. New research from Prudential shows that self-employed workers are heading towards a pension saving crisis as they cannot afford to save for their retirement.
SURVEY FINDINGS
1. Its nationwide study found more than two fifths (43 per cent) 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 self-employed say they cannot afford to save for retirement.
2. 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 Prudential’s research found they are heading for a less comfortable retirement with many not planning to stop work.
3. Around one in three (31 per cent) 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.
4. 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 self-employed save to build up a safety net in case of an emergency in comparison with 57 per cent of those in employment.
5. 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 (19 per cent) are not confident with money and financial matters, while a quarter (24 per cent) worry that they do not know enough about money.
AUTOMATIC ENROLLMENT FOR SELF-EMPLOYED
1. Automatic enrollment has transformed pension saving with almost 10 million people automatically enrolled since 2012. Now the government is embracing the challenge of encouraging the self-employed to put away money for later life.
2. New evidence shows that the rate of people stopping saving into a workplace pension for 2017 to 2018 was just 0.7 per cent, and this has not changed in the period April to June 2018 following the first increase in minimum contributions.
3. Pensions and long-term savings trials for self-employed people REPORT <https://www.gov.uk/government/publications/pensions-and-long-term-savings-trials-for-self-employed-people>
VIEWS
1. All this results 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.
2. 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.
3. Saving for a pension is still important as no one wants to work forever and no matter what your employment status, having money to fund your retirement is essential as the State Pension is unlikely to be enough to fund a comfortable retirement.
(Source: actuarialpost)
