Tuesday, March 31, 2020

Self-Employed Will Only Save For Retirement If Forced

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Half of the self-employed would willingly save into a pension – but only if the government brings in automatic enrolment regulations.

Otherwise, thousands of workers will continue without any retirement savings, says a new report by investment house Fidelity International.

One of the big issues about saving for the self-employed is locking away money.

Pension savings are not accessible until the age of 55 years old – and many self-employed are worried lean financial times due to an economic downturn or illness could leave them short of valuable cash if the money is tied up in a pension.

Currently, the research by Fidelity reveals, 62% of the self-employed have no pension savings, compared with 32% of employed workers who are auto-enrolled into a savings scheme.

Can’t afford to make pension savings

More than two-thirds of the self-employed (70%) say they don’t save for retirement because they cannot afford to.

Many do not understand how pensions like SIPPSs work – and 68% have never heard of one.

SIPPs are flexible, self-managed pensions that can suit the needs of self-employed retirement savers.

Emma-Lou Montgomery, associate director for personal investing at Fidelity International, said: “It is evident that many people in self-employment are leaving their financial futures too much to chance.

“We get it, having it all and being your own boss is hard work, and often, more pressing matters can get in the way of planning for your financial future. However, there are simple steps that you can take to get you on the path to achieving your financial goals now, and in the long-term.

Small changes make the difference

“We appreciate that being self-employed may bring periods when you’re out of work or awaiting payment from various contractors, and that can make you reluctant to commit your money to a long-term investment, but it’s essential that you look after your future.

““Putting your business first is one thing but you shouldn’t let your personal financial goals be forgotten along the way, especially when small changes can make a big difference. This is the crux of our report, which aims to show the self-employed how to take control of their personal finances and maximise their financial future.”

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