Two thirds of self-employed are not paying into pensions, report finds
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Two thirds of self-employed are not paying into pensions, report finds
Two thirds of self-employed are not paying into pensions, report finds
Resolution Foundation finds majority of Britain's 4.5m self-employed people are not making any retirement provision
Two-thirds of the growing number of self-employed workers are failing to pay anything into a pension policy, leaving themselves at risk of financial insecurity later in life, a report will warn this week.
The study on the changing nature of employment by the Resolution Foundation thinktank will paint a picture of a growing army of self-employed people who are mostly at ease with being their own bosses.
One in three self-employed people describe themselves as "entrepreneurs", while three-quarters say that, rather than being forced into this type of employment because there was no alternative, they chose it from a range of options. But while there is a level of contentment among the self-employed, polling for the report by Ipsos MORI found that only 34% of them were paying into a pension and laying proper plans for life after work.
Among self-employed workers in their 50s and 60s, the figure was 39%.
The low level of pension provision contrasts with that of employees – more than half of whom are making pension contributions, either directly or via their employer. The figures suggest many older self-employed people may now envisage working well into their later lives and are prepared to plan for that eventuality, rather than prioritising investment in pensions which would allow them to stop working either partially or completely.
There are now 4.5 million self-employed workers in the UK and the report will say there is little to suggest that the number of self-employed will contract, even if continued economic recovery creates more jobs.
But Conor D'Arcy, a researcher at the Resolution Foundation and co-author of the report, entitled Just the Job or a Working Compromise? The Changing Nature of Self-Employment, said there were problems ahead for those who had shunned the idea of pension planning.
"It seems there's a growing appetite for self-employment which is not deterred by the financial difficulties that can go with it. Of course, lots of self-employed people are secure and comfortable, but there's worrying evidence that some are financially vulnerable because of the specific problems a self-employed person can have in getting mortgages, credit or tenancies and in providing for their retirement."
The Trades Union Congress said recently that self-employment accounted for 44% of the net rise in employment since mid-2010, with pensioners, part-time workers and "odd-jobbers" the fastest-growing groups.
Workers aged 50 and over account for half the increase in self-employment, with self-employed workers aged 65 and over being the fastest growing group in the labour market, having increased by 29% since the end of 2010.
The Resolution Foundation study find the self-employed do face greater difficulty in securing credit, mortgages and tenancies. Almost one in seven (15%) say they've been prevented from getting personal credit or loans because of their employment statues. One in five (20%) say they were prevented from getting a mortgage for the same reason and a smaller proportion, one in 17 (6%) report problems in securing a rental tenancy.
The Resolution Foundation will say that if high levels of self-employment are to become a permanent feature of the labour market, politicians will need to focus more on making sure that people build up adequate pensions and savings and have access to housing and credit.
http://www.theguardian.com/money/2014/may/03/self-employed-not-paying-into-pensions-thinktank
I think a large number of self employed people live hand to mouth and hope that when things pick up they can start a pension plan.
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Re: Two thirds of self-employed are not paying into pensions, report finds
It's great being self-employed but it can be a bit risky. Self employed people pay two kinds of NI but it doesn't cover them for contribution-based JSA. They are of course free to take out a personal pension, and they should do that really.
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