The auto-enrolment scheme could now become available for freelancers, after four years of it being offered only to full-time employees.
The pension scheme that covers 6.7 million employees is anticipated by the Financial Times to be extended to also include the 4.63 million freelancers working in the UK.
However, the predicted system would mean greater National Insurance liability for those working under the self-employed title. The idea would be for a private pension with the same auto-enrolment framework that works just for freelancers.
IPSE, the membership body for contractors, independent professionals and freelancers, called on the government to work with auto-enrolment provider NEST and create a scheme that caters specifically for the self-employed workers of the UK.
“[We] call on NEST to create a flexible pension solution for the self-employed, allowing them to withdraw the last two years of contributions without a penalty.
“This would not require any additional contribution from government,” IPSE said. “The scheme would be solely funded by the payments made by the self-employed person.”
Self-employed workers plan to ‘work until they drop’
First reported in the Telegraph, a Resolution think tank found that the majority of freelancers are unprepared for their retirement, with two thirds planning to ‘work until they drop’.
Other research found that almost a third (29%) of freelancers expect to be reliant on their basic state pension when they retire.
In an interview first reported by the Telegraph, Malcolm McLean, a consultant at pension firm Barnett Waddingham, said: “Despite more people saving into pensions because of auto-enrolment, the number of self-employed people with a pension is falling.”
McLean went on to mention the bitter-sweet report of a rising number of freelancers: “This continuing downward trend in pension saving by the self-employed is a matter of great concern, more so as the numbers of people opting to work for themselves appear to be on the increase.”
He added: “This decline could be slowed 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.”
Are you a freelancer who would make use of the auto-enrolment scheme? Share your thoughts in the comment section below.