New research suggesting that 45% of freelancers are not saving into a pension has prompted renewed calls for political parties to tackle the issue in their manifestos ahead of the next election.
The findings, released recently by IPSE (the Association of Independent Professionals and the Self-Employed) and financial planning consultants CMME Contractor Wealth, are the latest sign of a worsening outlook for the retirement plans of the self-employed.
The research revealed that 15 per cent of freelancers don’t currently have a private or personal pension, whilst 30 per cent indicated that despite having a pension, they are not currently paying into it.
The top reasons reported by the self-employed for not currently saving into a pension included having other financial priorities (34%), affordability (24%) and ceasing contributions to a pension after becoming self-employed (24%).
This follows research published by IPSE and CMME Contractor Wealth in 2021, which found that 14% of self-employed professionals were not saving for later life in any way.
Unlike employees, the self-employed do not benefit from automatic enrolment into a workplace pension or from additional contributions by an employer.
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:
“Today’s findings are a disturbing reminder of the crisis in later life saving facing the self-employed, which shows no sign of abating amid increasing pressures on the cost of living.”
“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. Consulting with financial professionals who understand the unique pressures of self-employment can make this a much less daunting task.”