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Millions of self-employed workers not saving sufficiently for their retirement

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Millions of self-employed workers not saving sufficiently for their retirement

Lifetime news

Posted on: 20/10/2020

More than 3.5 million self-employed workers in the UK are not paying into a private pension to fund their retirement plans.

That’s according to a new study from the Institute for Fiscal Studies (IFS).

What emerges most from the study is the clear warning that saving among the self-employed has dramatically declined over the past two decades.

That is in stark contrast to those people in the employed sector who have been opted in to automatic enrolment. The government introduced scheme has led to a noticeable rise in saving among those who do not work for themselves.

Self-employed people are not only missing out on the auto enrolment benefits, but also are less likely to be building up their entitlement to the state pension, therefore struggling to get the full state pension amount which requires 35 years of national insurance contributions.

The self-employed among the UK workforce have also seen a decline in other forms of saving, that could be seen as an alternative to pensions, such as personal savings accounts, shares and ISAs.

In a previous study, back in 1998, almost 70% of self-employed people who were earning at least £500 in week were saving into a private pension. In 2018-19 that figure had dropped to just 24%.

The IFS has stated that the government and other policymakers should be ‘concerned’ about these latest findings – and should start to look at ways of helping and encouraging self-employed people to save more in order to fund their retirement. However, the study also found that the self-employed, despite a worryingly large proportion of them expecting to have no private pension to call upon in retirement, do appear to be aware of the ramifications of not saving, which makes the guidance and subsequent advice financial planning companies like Lifetime can offer even more important.

If you are self-employed and are worried about saving for your retirement then please get in touch with us here at Lifetime. We can help you fully understand your financial situation – and plan for that day when you retire.

Telephone: 01226 208600; email: communicationsdept@lifetime-fm.com

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