New study suggests 50 per cent of self-employed workers are now paying into personal pension schemes
Half of all self-employed workers in the UK are now paying into personal pension schemes to save money for their retirement according to a new study, which has shown a year-on-year increase of around 14 per cent.
Data gathered from a survey of more than 1,800 contractors and freelancers by specialist accountancy firm SJD Accountancy revealed how 50.2 per cent were now saving into a personal pension scheme, whilst 49.8 per cent had made the decision not to.
The figures showed a noticeable improvement on the same study in 2018, which found that almost two-thirds (64 per cent) were not paying into personal pension schemes.
However, with an estimated 4.5 million self-employed workers in Britain, the figures still suggest as many as 2.25 million self-employed workers are turning their backs on defined contribution schemes.
Of those that did pay into one, almost 40 per cent were above the age of 31 when they started making payments. Just under 43 per cent were between the ages of 22-30, whilst 18 per cent were aged 21 or under.
The self-employed market also remains well behind private-sector workers in this area, with government data published in early 2019 revealing that 81 per cent of private-sector workers – some ten million people – are now paying into a pension plan, thanks to the introduction of auto-enrolment in 2012.
Findings from the survey also revealed that almost two-thirds of self-employed workers (64 per cent) expected to be working beyond the age of 64. That number was up six per cent on the 2018 study, highlighting how more self-employed workers are expecting to work beyond the current state retirement age of 65.
James Foster, Senior Commercial Manager at SJD Accountancy, said: “We conduct regular surveys with the contractors and freelancers in our network to keep a close eye on our industry and help identify emerging trends in our market.
“Although this year’s study suggests that slightly more contractors and freelancers are using personal pension schemes than in 2018 – which of course is welcome news – there are still a significant number of workers that aren’t choosing to take advantage of the pensions tax relief to save for later life.
“This can be for a variety of reasons, but we often find that having easy access to earnings is the dominant factor, with many self-employed people preferring not to tie their money up in case they need access to finance between contracts or projects.
“There remains a huge gap between self-employed workers and employees, with little in the way of legislative change to try and readdress the balance. When you combine this with some of the upcoming changes to the contracting industry through IR35 changes in the private sector, it’s clear that more needs to be done.
“Being self-employed offers people so much freedom with their working life and provides vital skills to UK businesses. But it’s important we understand some of the challenges facing these workers if we are to protect the long-term future of the sector and help safeguard our economy.”