A ‘sidecar pension’ scheme could help increase retirement savings among the self-employed, according to the Association of Independent Professionals and the Self-Employed (IPSE).
This scheme would allow savers to divide their contributions between a pension pot and a ‘rainy-day fund’, until a savings cap is met on the rainy-day fund.
After this point, any further contributions would only be paid into the pension pot.
The ‘sidecar pension’ is 1 of IPSE’s 6 recommendations to solve a “looming crisis” as the growing self-employed population nears retirement.
In a survey of more than 1,000 self-employed people, 67% said they were concerned about preparing financially for later life but only 31% were paying into a pension.
The report warned that unless more self-employed individuals are encouraged to save, increasing numbers of people will be reliant on the state pension as their main source of income.
Other recommendations to increase saving levels included making pension products more user-friendly and improving financial education and guidance.
However, IPSE rejected the idea of rolling out auto-enrolment for the self-employed, as the research found it would not have enough support.
For any help or advice with financial planning talk to RPD