Self-employed? How much do you know about the single-tier pension?

Since the economic crisis the amount of unemployed people in the UK has risen by 10 per cent, to just over four million people working for themselves.

Although those people who are self employed make up a seventh of the workforce, they only receive tiny pension tax relief, £800m out of a possible £28.5bn available in the UK. The average employed person also receives six times as much tax relief as his self-employed counterparts.

Currently self-employed people do not qualify for the state second pension. The single-tier pension due to be introduced in 2016 will help to reduce the pension void between the employed and self-employed. Although self-employed people in the UK will not really experience equality for sometime, as employees will protect their higher pensions through S2P (State Second Pension) or contract-out to alternatives.

In a report this year by Scottish Widows it revealed that 33% of self-employed are putting enough into place for their retirement, compared to 45% overall. People working for themselves, 20% are relying on previous work pensions to provide them with their main retirement income, as they feel that this will provide them with more than their own retirement savings.

There is a misconception that business owners can top up their pension pot by selling off their business, as overall only 8% of self-employed expect that to be one of their top three income sources in retirement. They also expect to have to work much longer than the normal retirement age, with 1 out of 8 self-employed stating that they will probably have to work until they are at least 75 years of age.

The government still needs to do more to even the gap between employees and people working for themselves.

If you are self-employed and are worried about how you can save/invest enough to prepare you for the later years, then why not give Enable Independent a call, we will be able to review your current situation and put in real measures to try and enable you to achieve your retirement goals.

Issued by: Enable Independent Financial Life Planners
 25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us.
NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE.