Self-employed back pension rule change

Self-employed back pension rule change

Self-employed workers would back new laws to expand auto-enrolment or to make saving for retirement compulsory, research has found.

More than half of self-employed workers questioned by Prudential said they want the law changed to encourage them to save for their retirement.

Of these 27 per cent would support the expansion of auto-enrolment to cover the self-employed, and a further 27 per cent would back compulsory pension saving.

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The research was carried out by Consumer Intelligence among 1,178 UK adults between on 20 and 21 June 2018.

Vince Smith-Hughes, retirement expert at Prudential, said: "It is clear that the self-employed want help in saving for retirement and that the state pension alone may not be enough for a comfortable retirement.

"Workplace auto-enrolment has been a success for the employed with membership of occupational schemes at a record high of 41.1 million and up by 49 per cent over five years.

"We believe it is important that the government works with the self-employed, and the pensions industry, to ascertain the most suitable option and put appropriate rules in place as soon as practicable."

The government has mulled several options to encourage and support the self-employed to save via auto-enrolment in recent years but no formal action has been taken.

Documents released alongside last month's Budget revealed the Department for Work and Pensions plans to launch a paper on self-employed savings this winter.

The study highlighted the growing pension crisis among the self-employed, with more than two fifths (43 per cent) – the equivalent of more than two million workers - admitting to having no form of pension.

More than a quarter (28 per cent) said they will be reliant on the state pension as their main source of retirement income, worth just £8,546 a year. 

Prudential’s research also showed almost one in five (18 per cent) self-employed people do not believe pensions apply to them while 20 per cent found the rules confusing and 15 per cent worried about the fact pensions do not allow them to immediately access their funds if out of work.

Michelle Cracknell, chief executive officer of The Pensions Advisory Service (TPAS), said there was a clear disconnect between the self-employed and pensions, as self-employed workers were not getting the help they need.

She said: "The self-employed are a diverse group who have many different needs and desires. We must find new ways of getting the key message of the importance of retirement savings across to them and importantly new mediums to deliver those messages."

Venilia Batista Amorim is a freelance writer for FTAdviser