Flat-rate state pension 'will benefit the self-employed'

The brought forward introduction of a flat-rate state pension will help to create a more entrepreneurial Britain, says an accountant specialising in one-person businesses, in line with George Osborne’s claim in his Budget 2013 speech.

ClearSky Accounting believes that the incoming universal weekly payment – brought forward under Budget 2013 to be unveiled in 2016 (not 2017 as initially planned) - should give many aspiring business-owners greater confidence to ‘go it alone.’

The firm’s accounting director Daniel Mepham has 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 freelancers’ IFA ContractorMoney, which says the state pension is “inadequate”, Mr Mepham said the current system represented a “significant barrier” to individuals wishing to set up their own business.

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 new Single Tier Pension, expected to be rolled out in England, Wales and Scotland from 2016, as specified in George Osborne’s Budget last month.

"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." 

According to Mr Osborne, a simple, flat rate pension accessible to everyone and worth £144 a week, will be brought forward to 2016 to help "the low paid, the self-employed and millions of women".

Editor's Note: Related Reading -

Freelancers 'are winners of state pension changes'


9th April 2013

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