Pension revolution: Self-employed risk being 'left behind'
07 October 2016
7 October 2016
October marks four years since auto enrolment was introduced in the UK. So far over 6.5 million people have been enrolled into a workplace pension, with an opt-out rate of less than 10 per cent.
While millions of workers are saving for their future, new analysis from NEST shows that the UK’s self-employed workforce is at risk of being left behind. Data shows that of the 4.5 million self-employed workers in the UK, only 765,000 are currently saving into a pension. Not only are they missing out on tax relief and investment returns, but they risk being left behind and not meeting their aspirations for retirement.
NEST’s calculations show that an automatically enrolled 22-year-old on average earnings of £22,900 could achieve a pension pot of around £150,000 by the time they reach retirement age. With millions of workers changing their retirement prospects through auto enrolment, people that work for themselves are at risk of being left behind.
Commenting, Debbie Gupta, executive director of corporate services at NEST, said:
“Auto enrolment has started a pension revolution, reversing the decline in pension saving and giving millions an opportunity to save for their retirement. It’s great to see the difference it’s making. In the last four years over 6.5 million workers have started saving for their future. However, there’s a risk that millions of self-employed workers are getting left behind.
“Saving a little bit each month can soon add up, particularly when you add on tax relief and investment returns. Pension savings, combined with the state pension can make a real difference to retirement. We all want to carry on doing the things we love - whether that’s going out for dinner, trips to the cinema or maybe even a week in the sun. Having a pension could go a long way to helping achieve those aspirations.”
Malcolm McCurrach, self-employed owner of New Wave Images UK based in Scotland, said:
“I know that saving for my retirement is important, vital in fact. And if I don’t prioritise it, who will? I’ll admit, my wife did give me a little bit of a nudge to get a self-employment pension set up, and I’m glad she did. I have a direct debit paying into my NEST pension every month. I find it really flexible because I have the choice whether to dial it up or down as my cashflow changes. Generally though, I put in the same amount each month and feel peace-of-mind that I am setting aside something for my future.”