Freelancers forego £92,000 in retirement funds
Self-employed freelancers are missing out on up to £91,512 over their working lives because they do not receive employer contributions through a company pension scheme, a new study has found.
According to Prudential, UK workers earn £26,664 a year on average. Those who are members of a company pension scheme receive average employer contributions of £2,232 a year and contribute £945 themselves, making a total of £3,177 annually in pension contributions.
Over the course of an average working life, the average employer contributions alone add up to £91,512. But self-employed workers, who can’t join a company pension scheme, will miss out on this substantial contribution towards their retirement funding.
Separate research by Prudential among self-employed workers has found that almost half (46 per cent) have no private pension savings at all to support them in retirement.
While some respondents said they planned to draw upon other sources of income when they stopped working, almost a third (29 per cent) of business owners expected to have to rely entirely on the State Pension for their income in retirement.
Stan Russell, retirement expert at Prudential, said: “Self-employed workers have to be even more proactive when it comes to saving for retirement, as they can’t benefit from employer contributions in a company pension scheme.
He added: “We know from our research that a significant proportion of self-employed workers have no private pension and will rely solely on the State Pension in retirement. Often this is because they have prioritised the needs of their business over saving into a pension.
“However, the State Pension alone is not enough for a good standard of living in retirement, which is why saving as much as possible into a pension from an early stage is crucial.”