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Self-employed workers abandoning pensions

Less than a quarter of self-employed men are contributing to a personal pension, down 40 percentage points in 20 years, according to Office for National Statistics figures.

The ONS’s latest stats show there were 4.2 million people classed as self-employed in January 2013, 58 per cent of which were men working full-time. However, only 22 per cent contributed to a pension in 2012/13, down from 62 per cent in 1996/7. The participation rate was at 35 per cent in 2005/6.

In contrast, total occupational membership rose to 8.1 million in 2013 as a result of auto-enrolment. The reforms have reversed an almost continuous decline in membership between 1967, when membership stood at 12.2 million.

Self-employed workers are not included in the auto-enrolment reforms, and do not have to join a pension scheme.

The ONS says the introduction of Isas in 1999 and the recession may be behind the rapid fall in savings rates.

Earlier this year a Pensions Policy Institute report warned “unless a significant proportion of self-employed people choose to join a pension scheme, pension saving may remain low among this group even after automatic enrolment”.

Not all master trusts are open to the self-employed but Government-backed auto-enrolment scheme Nest has been accepting self-employed members since 2011.

Barnett Waddingham senior consultant Malcolm McLean says: “This continuing downward trend in pension saving by the self-employed is, or should be, a matter of concern – more so as the numbers of people opting to work for themselves appear to be on the increase.

”This decline could  be slowed down or even possibly reversed if the government were to offer further tax incentives for self-employed workers to join the auto-enrolment programme or find some other way of making savings provision for their old age.”



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Rt Hon Sir Arthur Streeb-Greebling 30th October 2014 at 6:07 pm

    Not quite true old boy. Most sel-employed pay their Class 3 because they are savvy and know that the State Pension is worth a lot more banks per buck than a personal pension. The poor schucks trapped on AE should go self-employed.

  2. Probably the result of a lot factors although i would suggest that the governments continuous meddling combined with the constant bad press pensions have received over the past 20 years have turned most of the public off pension savings. It is notable that the only significant reversal of pension savings decline has been the creation of Autoenrolment, a scheme that relies on public apathy to put people in a pension scheme.

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