The Department for Work and Pensions (DWP) is aiming to expand pension coverage among the self-employed.
Pension automatic enrolment – or Workplace Pensions to you and I – has become a major success since it was launched nearly seven years ago, with almost 10 million people joining a workplace pension arrangement.
Adoption rates have been much higher than many pundits had forecast – the latest calculation from the DWP showed that in 2016/17 the overall opt out rate was just 9%.
However, there is one group of people that the automatic enrolment regime completely misses: the self-employed.
According to the DWP, the self-employed account for about 15% of the UK workforce – 4.7 5 million people. Private pension coverage in this sector is low, despite the tax benefits on offer. The DWP has calculated that in 2016/17, only about 1 in 7 of the self-employed were saving into a pension.
How to encourage pension saving?
In December the DWP announced that it would be running a programme of trials aimed at encouraging the self-employed to start saving. These trials will involve a range of trade bodies and financial services organisations, including the main government initiated auto-enrolment scheme, NEST, which now has over seven million members.
Keith Towler, one of the Pension specialists at Independent Financial Advisers Pembroke Financial Services who provide help and guidance to clients in Shoreham and Brighton says “If you are self-employed and one of the 6 in 7 who is not yet saving for your retirement, you should not wait for the DWP to find ways to nudge you into action. The hard fact is that with no private pension provision, your retirement pension will simply be the new state pension – £168.60 a week (£8,767 a year) from April. Remember too that the state pension is only payable from state pension age, which is now in the process of rising to 66 by October 2020 and 67 by April 2028.”
Keith further adds “If you want a higher pension, and/or you do not want to wait until the state decides it is time for you to retire, then the sooner you begin to consider your retirement planning, the better.”
Pembroke have 8 regulated IFAs, all qualified and ready to help you with planning for retirement, so why not talk about your options now? These could well include routes other than pure pension arrangements.
Call on 01273 774855 or email us by clicking here.
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