There’s nothing quite like hitting the ground running and entering a brand-new calendar year with a bang. So today we’re swapping Pringles and party hats for the Self-Employed Pension Crisis.
According to a paper recently released by the Department for Work & Pensions, the number of UK workers taking the leap of faith into self-employment now sits at 4.8 million. This is a significant hike from previous years which is, of course, fantastic news.
However – you probably sensed there was a big ‘but’ coming, right? Only a minuscule 14% of those in self-employment are investing into a pension or retirement saving fund.
Worryingly, this demonstrates that the number of self-employed workers saving financial provision for their future has more than halved over the last decade.
Why is this? Well, it could be for a number of reasons:
- They don’t know how to
- They just keep putting it off
- They can’t afford to
- They think it’s an effective cost-cutting tactic
While dodging the inevitable need to amass a healthy pension pot can reduce outgoings in the short term, this will almost definitely transpire to be a terrible idea further down the line.
As a self-employed worker who has chosen to become their own boss, you consequentially forgo the luxury of auto-enrolment and employer pension contributions. Therefore, it’s down to you to make sure there is a sufficient amount of gold at the end of the retirement rainbow.
Taking all of the above into consideration, the Government plans to address the Self-Employed Pension Crisis head-on during 2019 and Fintech is on hand to help.
Fintech versus the Self-Employment Pension Crisis
In the coming months, the Government will be road-testing a number of trials and initiatives in a bid to rapidly increase the number of self-employed workers saving into a retirement fund.
They will be working with Fintech big wigs (such as Money Box, Plum, Portify and Trezeo), most of which are free to access via the App Store, to support finance management and incentive saving.
Applications and software like these also help those in self-employment deal with issues such as holiday and sick pay in order to better manage cash flow and encourage regular pension contributions.
HMRC’s Making Tax Digital (which is due to come into action this year) will catalyse a move towards electronic uploads via accounting software.
One of the many benefits of this is a reduction in human error as optical character recognition enables business owners to scan receipts and invoices via their smartphone camera. This is just one example of how Fintech developments can help nurture a more financially stable future both existing and aspiring self-employed workers.
The Government also reportedly has plans to use accounting systems and invoicing platforms to experiment with new marketing tactics which aim to prompt more pension pay ins. This will be carried out with the help of workplace pension scheme, NEST.
So, if this article has left you feeling curious about your pension saving options or if you would like more information about our cloud-based bookkeeping software, Pandle, just say the word.
Get in touch today and we’ll be more than happy to impart our pearls of wisdom and explain how we can help you afford that luxury yacht on the Med post-retirement.