Plea to help self-employed save for pension: report

Plea to help self-employed save for pension: report

Government needs to do more to make sure the self-employed save enough for their retirement, a report from the Resolution Foundation has found.

The nine-page report said that since the turn of the century the number of self-employed people – approximately 4.5m people – have had markedly lower levels of pension coverage than employees.

Since 2006/07 the proportion of the self-employed with a non-frozen pension has gone down from 33 per cent to 27 per cent.

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Meanwhile the number of self-employed making yearly contributions has halved since 2001/02.

The report said: “The self-employed are more likely to save in vehicles other than pensions, have greater potential income from financial products or housing and some can sell their businesses.

“But perhaps the biggest split in the self-employed is among those with employees, who seem reasonably well-prepared as a group, and those without employees, who resemble employees more closely.”

The report suggested that the primary barrier to saving more for this group was being on a low income and feeling unable to afford to contribute.

Self-employed people also do not necessarily invest in other savings products. The analysis showed that in terms of the money saved in an Isa, there was little difference between the self-employed and employees among those aged between 16 and 54.

In March, the Association of Independent Professionals and the Self Employed released a report calling for more action on helping the self-employed save for their retirement.

Simon McVicker, director of policy and external affairs at Ipse, said: “With ever-increasing numbers of people becoming their own boss, coupled with an ageing population, pensions are a ticking time-bomb for the self-employed.

“To stop the problem before it starts, the government must act now and create a new pension scheme for the self-employed administered by Nest.”

Adviser view

Robin Melley, a chartered financial planner with Shropshire-based Matrix Capital, said: “We have got a number of self-employed clients, and I think it is fair to say that the higher earning ones are making proper retirement provisions.

“I suspect it is the one-man-band self-employed that is not saving, and I think education is the biggest issue. There are still a lot of misunderstandings about pensions.”