Posted by: PAPERWRK
18th September 2018
Over the past 20 years, there has been a radical change in self-employment here in the UK and with the advent of the platform economy, tools such as PAPERWRK now exist for more and more freelancers to earn an income without ever having to be on payroll.
Freelancers now have a wider flexibility for their lives but at a cost for their future. How many self-employed individuals are considering their old age? According to some recent statistics, 44% of all self-employed people in the UK are aged between 50 and 55 – or just over 2.1m people (31%) are paying into a private pension!
That’s a very worryingly low figure.
I’ve been mulling this over myself, as I reach a threshold of my life where I need to be preparing for the latter stages of my career. A few grey hairs does that to a man…
Over my 20+ year career – I’ve had a mixture of PAYE and self-employed roles. Now, as the CEO of Paperwrk, my life goals are slightly different but caring for my retirement is still an important part of my future financial planning.
My father – when I was 18 and in my first job – persuaded me to open a pension which I did (after buying my first car of course!). I was lucky to have had that advice but a lot of the self-employed are ambivalent about planning for their pension when they have other more pressing concerns about rent & bills.
I want to hope that people are going to get good advice from family or their Financial Advisor but the reality is, we live in a difficult society that pension planning is an afterthought when middle-age hits, rather than preparing the newly self-employed and freelancers with the tools necessary for their future. Graduates are leaving with huge debts and no career opportunities other than gig contracts on zero hour deals. How can anyone plan their financial future when this simply is something they can ill afford to pay for?
I know some recent reports by IPSE and ComRes have been done in this area but the impact in 20 or 30 years is going to be devastating for the social economy if we don’t get a grasp on this now.
There has been talk of solutions – such as sidecar pension schemes – that hopefully will go some way to shoring up this deficit.
However, the simple fact that thousands of self-employed people will never have a sufficient pension for when they retire is of concern.
There has to be a combined effort by schools, pension companies, the Government and the self-employed themselves to come together and to address this issue. If freelancing is a way of life for many now in the UK (15% of the workforce currently), then the reality of the matter is, this country could be in real financial trouble unless we take action now. Paperwrk combines a lot of the needs of the freelancer into a single place enabling you to link online accounts packages to track your invoices, but we’re constantly expanding the service to look at offering features such as Pensions and Insurance to freelancers.
With the push for Making Tax Digital (MTD) and services such as SimpleTax, Xero and FreeAgent becoming more prevalent – and even the Open Banking initiative to add into the mix – we have the technology (quoting the Six-million Dollar Man TV show).
Leaders from all segments need to combine. We can no longer sit in isolation and assume that we have a pension or financial security for our retirement. My own father-in-law is self-employed and still works part-time at 78. Partly because he chooses to, but partly because he is concerned about his retirement. He’s not as tech-savvy as you are though!
Do we want to end up like him at nearly 80 still working to pay for basic services? I certainly don’t.
Maybe it’s my age – but I recommend to anyone who is self-employed to look seriously at their income, and see if they can even spare just £25 a month to put into a pension.