A potential extension of auto-enrolment would only benefit 40% of self-employed workers, according to research.
The Pensions Policy Institute’s review into potential workplace pension solutions for self-employed workers revealed 12% of sole traders currently save into a pension.
Fewer than 1 in 3 (28%) believe pensions are the safest retirement saving option, while only 7% expect their business to provide the platform for a comfortable retirement.
More than a million people have become self-employed since the economic downturn in 2008, raising the UK’s self-employed total to 4.86 million in August 2017.
Jon Greer, head of retirement policy at Old Mutual Wealth (which sponsored the research), said:
“The savings system needs to recognise not all self-employed people will want to commit money into a pension and there may be good reasons for this.
“To make pensions more appropriate for the self-employed, a pension ‘sidecar’ should be explored, a pool of money made accessible at any age in times of need.
“I would urge the government to steer clear of a one-size-fits-all approach to pension saving for the self-employed.”
One solution under consideration by the Department for Work and Pensions would be to auto-enrol self-employed workers when they submit their self-assessment tax return.
This would also offer self-employed savers the option to opt out when submitting their tax return.
For any help or advice with financial planning talk to RPD