RSA unveils boosters to freelancers’ retirement security
Practical ways to boost the retirement security of self-employed people are set to be outlined in a new report today.
‘Venturing to Retire’ will detail a package of ‘freelancer-friendly’ reforms around nest eggs, led by a main recommendation for a flat-rate top –up from the government set at 30%.
The report will be unveiled by the RSA, a group which recently pointed out that self-employed people are four times less likely than employees to be contributing to a pension.
It has suggested that this lack of pension provision is because some self-employed people struggle to find the money to pay their tax bill, “let alone save for retirement.”
So the RSA is understood to have explored both changes to tax relief and “practical innovations,” aimed at lifting self-employed people’s participation in pension saving, especially where they are not eligible for auto-enrolment.
Tom McPhail of Hargreaves Lansdown suggested yesterday that tweaks to pension taxation, rather than root-and-branch reform, will be more palatable to the government.
He added: “Most self-employed people start their working lives in employment so we have a crazy situation where they are being enrolled and then the pension system lets them go.
“By putting individuals in control of their own pension, we would incentivise pension providers to look after them and keep them engaged when they go self-employed.”
The creation of a body to promote financial security for the self-employed is expected among the RSA’s recommendations, as is giving people the right to keep contributing to a pension after leaving employment for self-employment.