Pensions - Articles - Flexiblility comes at a cost for the self-employed


Aegon conducted a survey of the self-employed which revealed that more than 5 out of 10 (55%) said an important reason for choosing to work for themselves was the ability to work a flexible schedule and hours. The appeal of being their own boss proved a strong attraction, with 59% stating it was another important reason for them taking the route of self-employment.

 • The UK’s self-employed value work flexibility and look for the same in retirement, with 68% picturing a flexible transition
 • The benefit of work freedom brings responsibility when it comes to pension arrangements – which many are failing to do
 • Less than a third (29%) have a backup plan if they have to stop working earlier than planned
  
 With people living healthier longer lives, the concept of retirement is changing rapidly, resulting in over half (53%) of respondents optimistic they’ll have opportunities to work part-time or differently before they finally retire.
  
 A phased approach to retirement allows people to combine work with leisure pursuits, being able to continue earning and stay active and involved in society. This steady approach to retirement is very appealing for the self-employed with 68% of those surveyed envisaging either slowing down, continuing to work occasionally, or just not retiring at all.
  
 However, with few employers currently offering employment practices to support this type of transition into retirement, the self-employed hold the advantage over their worker counterparts.
  
 When it comes to pension saving and retirement planning in general, the self-employed find themselves at a disadvantage compared to employees. For all the freedom and flexibility that comes with self-employment, it doesn’t include employer-sponsored plans enjoyed by employees. The necessity of planning for retirement falls squarely with the self-employed and at the moment is being overlooked by too many, meaning they’re missing out.
  
 This predicament is highlighted by recent figures released by the Department for Work and Pensions showing that while auto-enrolment has raised pension participation among employees, participation among self-employed workers has declined from 31 per cent in 2005/06 to 14 per cent in 2014/15.
  
 It’s also concerning that less than a third of self-employed have a backup plan if they had to stop working earlier than planned, which would leave them exposed to a lack of retirement funds.
  
 Kate Smith, head of pensions, comments: “Rapid technological, societal and economic changes have meant people have altered the way they work, leading to a huge jump in the number of self-employed in the UK. The appeal of being your own boss and the flexibility of working hours has also led to record numbers of self-employed. However, when it comes to saving, investing and planning for retirement, a change of approach is required. The self-employed need to be much more disciplined in their pension saving habits compared to their employed peers; they need to rely on themselves as they don’t benefit from automatic enrolment and an employer contribution.”
  

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