Last year was challenging, with job losses and pay cuts causing many to tighten their budgets.
It was particularly difficult for the self-employed, with many freelancers losing income as companies cut costs and stopped using contractors. Despite government grants being available, many self-employed workers have found they are not eligible.
Almost five million people in the UK are self-employed, or 15% of the workforce. This number is up from 3.2 million in 2000. Although there are many advantages to working for yourself, there are downsides too. Self-employed people don’t enjoy the same benefits as employed workers, such as holiday and sick pay; they are also unable to access the benefits of pension auto-enrolment.
Pension savings suffer
On the back of this, there are concerns that self-employed workers are not saving enough for retirement, with figures showing that 85% of self-employed people do not pay into a pension, up from 73% in 2008/2009. (Meanwhile, those who do have a pension have 77% of the pension wealth of the average population.)
This can partly be attributed to lower-than-average incomes and the need for financial liquidity, made worse due to the pandemic. However, it is also down to attitudinal and other barriers as, even among the highest-paid self-employed workers, only 19% save into a pension.
Make 2021 the year you get your pension on track
If you are self-employed, it’s important not to neglect your pension and make sure you get it back on track by increasing contributions where you can. If you’re concerned about your pension and retirement plans, don’t hesitate to get in touch.