Published On: Fri, Aug 7th, 2020

Pension UK: This is the reason self-employed people could be at risk in retirement | Personal Finance | Finance

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Pension pots can provide reassurance for retirement, as quitting the workforce means losing a steady stream of income through salary or wages. But for self-employed people, there are often different arrangements, which have to be considered often decades in advance of retirement. In the UK, companies are legally required to sign up their employees to an auto-enrolment scheme, which sees contributions build up.

“Unfortunately, auto-enrolment isn’t an option when you are self-employed, and one in four self employed people have nothing in terms of a pension pot.

“Additionally, more than half fail to save enough, even if they do have a pension.”

Ms Leiper said more needed to be done by the government to encourage self-employed people to save towards a pension.

As the situation currently stands, many self-employed people will be left without financial protection in their later years.

She explained that as pensions are often locked away until the age of 55, many people are reluctant to save in this way.

But Ms Leiper concluded by stressing that pensions often have good tax advantages and other benefits, so they remain important to consider.

The government has provided advice on pension saving for the self-employed in Britain.

In many cases, it states, it is not suitable to rely only on the State Pension as this is only a “foundation” for retirement. 

The Pensions Advisory Service currently offers a free mid-life review for self-employed people, so Britons are encouraged to take up this offer.

It includes advice and support surrounding money, work, health and family needs. 

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