Those who are self employed are struggling to save towards retirement.
According to research, insurance company Prudential found that more than two out of five workers who are self employed do not have any pension savings at all.
This amounts to a total of 43 per cent of self employed workers who cannot afford to put money aside for when they retire.
While it is undoubtedly concerning that so many are currently unable to look towards securing their future, this may be attributed to the fact that making the transition between employed and self employed can be costly. Also, there are many self employed workers who put focus, including financially, on ensuring that their business continues to develop. In fact, one in ten stated that they choose to reinvest spare money back into their business rather than save into a pension.
It is perhaps little surprise then that Prudential found that the most common reason as to why the self employed do not contribute to a pension is because of affordability, with 57 per cent stating that they either cannot afford it, or have other priorities for which they need to use their finances for.
This can then often leave the self employed with very little money left to invest in their retirement plans, and more worryingly is the fact that only 17 per cent actually contribute to a pension regularly, while six per cent make contributions when they are able to do so.
What’s more, it seems that there are a number of self employed who are so dedicated to their work that they aren’t looking towards retirement as they don’t think it will happen, as six per cent said they will never actually stop working.
As the number of people who are self employed continues to rise, with government figures last showing that this number stood at 4.6 million (which makes up for 15 per cent of the UK’s workforce), it is imperative that they begin to look towards retirement as they are putting themselves at risk should anything change in the future.
Stan Russell, retirement income expert at Prudential, said: “Focusing on day-to-day finances is second-nature for those who are self-employed. However, not considering or planning for the longer-term is a risky approach, especially if those who own their own businesses don’t want to end up having to work past their ideal retirement age.…
Remember that if you are working through your own personal service company as a freelancer or contractor, then you can benefit by funding your pension through your company and taking advantage by saving money on corporation and personal tax. Speak to your accountant to find out more.
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