Skip to main content

Pensions & the self-employed – do regulations unfairly discriminate?

PensionsAre you self-employed? Do you have a pension? Do you have a pension that will be enough to maintain a decent standard of living in old age? How important are pensions to you when money is tight?

Pensions reform is under discussion at the moment,  but for the Dept . of Work & Pensions undertaking the review, the self-employed still seems to be something of a blind spot.

Certain assumptions are frequently made – that the self-employed have a partner’s pension they can rely on; that they have found an ISA a more flexible way to save for retirement, or that they are investing in a property portfolio to draw on in retirement. All too often none of these assumptions is correct. If you are a small business owner, and the choice is between investment in your pension and investment in the business, which do you put first? Most would say their business and it is all too easy when you have no-one in HR to advise you, no employer contributions or workplace pension, to find that you have too little put aside when you need it.

The Royal Society of the Arts (RSA), a think tank, released a recent report entitled ‘Venturing to Retire’ and wants pensions relief to be the vehicle that offers more support for lower earners and the self-employed.  The RSA suggests a 30% flat rate (instead of the current 20% 40% and 45% rates)  which would leave three-quarters of self-employed and low paid workers better off. The main concern is that under 20% of all those working for themselves pay into a pension and 45% have no pension at all. This is clearly something that will impact on the elderly population in the not so distant future as the number of people with their own business grows and self-employment is encouraged as an alternative to unemployment.

What do you think? How are you providing for your twilight years? Are you worried about the future? We would love to hear your views.