New research suggests that 45% of self-employed workers are not saving into a pension, prompting renewed calls for political parties to tackle the issue ahead of the next election.
Research by the Association of Independent Professionals and the Self-Employed (IPSE) and financial planning consultants CMME Contractor Wealth has revealed that 15% of freelancers don't have a private or personal pension, whilst 30% say that despite having a pension, they are not currently paying into it.
Unlike employees, the self-employed do not benefit from automatic enrolment into a workplace pension or from additional contributions by an employer. The survey has identified three key reasons why freelancers are not currently saving into a pension:
- 34% say they have other financial priorities;
- 24% say they can't afford to put money into a pension;
- 24% said that they stopped contributions to a pension after becoming self-employed.
Andy Chamberlain, director of policy at IPSE, said: "Successive governments have ducked the issue of self-employed savings for years, but the crisis is now too big for a future government to ignore. It will likely require intervention of a magnitude similar to automatic enrolment for employees.
"Pensions aren't the only option for those saving for later life. Some self-employed people may find other methods of saving more attractive, if they were better suited to volatile incomes; the Lifetime ISA is one example, and IPSE has called for it to be revamped to better serve independent workers.
"With an election little over one year away, political parties with ambitions for government must get to grips with this challenge now and be unafraid to propose bold, radical solutions in their bid to win the backing of the self-employed."
Mike Coshott, ceo at CMME Contractor Wealth, said: "Self-employed professionals naturally want to ensure that their businesses have the capital they need to function and grow, but it's essential that they don't overlook the need to set money aside for later life in the process."
Boost in self-employment numbers
The latest figures from the Office for National Statistics (ONS) show that there are currently 154,000 more self-employed workers in the UK, compared to this time last year.
In total, there are now 4.4 million freelancers in the UK. There has been a significant rise in the number of women choosing to work for themselves, with an additional 93,000 self-employed women compared to last year.
"This is a very positive sign that the economy is perhaps starting to recover from the damage done by the pandemic, which put more than 700,000 freelancers and sole traders out of business. We know that people choose self-employment for overwhelmingly positive reasons, whether it's to follow a passion, to work more flexibly or to be your own boss. That more and more people are choosing to strike out on their own once again is something to applaud." Andy Chamberlain, IPSE.
Written by Rachel Miller.