Freelancers and limited company contractors may be interested to hear that a new report has revealed 29% of self-employed people will rely entirely on the state pension, when it comes to the time to retire.
The study, carried out by Prudential Group, found that worryingly almost half of the contractors and UK business owners surveyed, said they had no private pension scheme in place.
Of those who didn’t plan to make any private pension contributions, 54% said it was because they simply couldn’t afford to set the money aside for their future.
Eighteen per cent said they don’t have a pension because they will never retire, and nine per cent of respondents claim they have sufficient funds in a company pension from previous employment.
Retirement expert at Prudential, Stan Russell, said, “It’s sometimes hard for self-employed workers to distinguish between their business and personal finances. Often, investing in the business takes priority over saving for retirement – an issue that is particularly prevalent now, given the tough economic conditions facing UK businesses.”
Mr Russel added, “Unfortunately, the long-term implications of not saving for retirement are that many retirees will have a real income shock and reduced living standards when they finally retire.
“And while a number of business owners say they don’t need a pension because they’ll never stop working, this optimistic approach won’t always be realistic – for example because of health issues later in life.”