Personal PensionDec 10 2015

Policymakers have neglected pension needs of self-employed

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Policymakers have neglected pension needs of self-employed

Auto-enrolment is working magic for millions, but the self-employed risk becoming the ‘forgotten workers’ with future financial problems in store, Tom McPhail has warned.

The head of retirement policy for Bristol-based Hargreaves Lansdown, said: “Auto-enrolment is working its magic for millions of employees but in the meantime, the self-employed have been all but forgotten about by policymakers.”

He said the two key elements of auto-enrolment were the default membership of a private pension and the benefit of the employer contribution, adding “it may be that the only way to deliver these benefits for the self-employed is through the tax and national insurance system.”

This comes after research from HMRC and ONS in November, which found that just 420,000 self-employed people are paying into a private pension, with an average contribution of £3,840 a year.

However, the research suggested there were 4.6m self-employed, which means pension participation among the self-employed is now below 10 per cent.

Adviser view

Jeremy Edwards, IFA at Leicestershire-based Martin-Redman Partners, said: “There are a lot of self-employed people who haven’t worked out that a pension is a way of storing money for the future without paying tax. People are happy to put money into property where they will lose a lot of advantages whereas with pensions you will gain.”