Freelancers may join auto-enrolment pension scheme
The pensions umbrella that covers almost seven million full-timers – automatic enrolment – is going to be considered for the self-employed too, a national paper reported at the weekend.
Expected in a new probe of auto-enrolment, the move could conclude that such freelancers must join the 6.7m staff who were recently placed into workplace pensions, the FT reported.
But under the envisaged system, the National Insurance liability for the self-employed would be greater, and it would be routed into a private pension via the auto-enrolment framework.
News of the move, which according to pensions minister Richard Harrington could reportedly lead to self-employed NI rates altering in 2019, will likely please IPSE.
The freelancers’ group has said the government should use tomorrow’s Autumn Statement to work with auto-enrolment provider NEST to creative nest egg provisions for the self-employed.
“[We] call on NEST to create a flexible pension solution for the self-employed, allowing them to withdraw the last two years of contributions without a penalty.
“This would not require any additional contribution from government,” IPSE said. “The scheme would be solely funded by the payments made by the self-employed person.”
The group made the call after it found that property is the only savings vehicle that more than half of freelance workers feel confident will support them in retirement.
A year earlier IPSE found that almost a fifth of freelancers were not saving for retirement at all; and of those that were, less than two-thirds said they used a pension fund, and only a third invested in property.
21st November 2016