Self Employed will need to save for their own pension
A record 4.5 million UK workers are now self-employed, with the number growing rapidly in the post-crisis years as major employers retrenched or froze recruitment. Recent figures from the Office of Budget Responsibility show that self-employed people are more likely to be low earners, with 35pc earning less than £10,000 a year, compared with 20pc in 2008.
The Government has introduced pension reforms in the form of “auto-enrolment” which will get millions of people saving into pensions for the first time. But not the self-employed. Unlike employees of firms, who will be automatically placed into a pension into which their employer and the Government will contribute, self-employed people get nothing under the flagship reforms.
Self-employed people will miss out on a lifetime of employer contributions. However, the self-employed will be entitled to the new state pension, which is more generous. This will start at no less than £42.40 a week, as long as they have made at least 10 qualifying years National Insurance contributions – up to no less than £148.40 a week for 35 qualifying years.