The introduction of a flat-rate state pension will help to create a more entrepreneurial Britain, an accountancy firm specialising in one-person businesses said yesterday.
ClearSky Accounting believes that the incoming universal weekly payment should give many aspiring company-owners greater confidence to set up in business on their own.
The firm’s accounting director Daniel Mepham explained: “The current state pension is skewed in favour of full-time, permanent employees of companies and organisations.
“Self-employed people currently do not earn any state second pension, with the consequence that many enterprising and ambitious people who dream of going into business, either as a contractor, sole trader or managing director of their own limited company, are discouraged from doing so by the fear of living in poverty in their old age.”
In line with specialist IFA ContractorMoney’s stance on the existing state pension, Mr Mepham said the current system represented a “significant barrier” to individuals wishing to ‘go it alone.’
As a result, he believes pension proposals by the coalition government to introduce a universal weekly payment – of £144 but accounting for inflation too – will offer “much needed reassurance” to those eying self-employment.
Moreover, individuals setting up in business on their own will no longer be “penalised” by the pension system thanks to the change, likely to be rolled out in England, Wales and Scotland from 2017.
“While it’s true that the benefit to self-employed people will be partly offset by the requirement to make National Insurance contributions for longer,” reflected ClearSky, “we believe the proposed changes should be wholeheartedly welcomed.”