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Self employed lose out on pension contributions

Self employed lose out on pension contributions
Published:  10 Jun at 9 AM
A recent survey has revealed how Britain’s self-employed could miss out on as much as £90,000 being added to their pensions. This is because they do not have access to employer contributions worth £2,232 annually.

Prudential claims that a person earning a salary of £26,664 per year over 41 years will accrue employer pension contributions of £91,512. However, workers who are self-employed have no such company pension scheme and are therefore missing out on a substantial addition to their pension pots.

Prudential retirement expert Stan Russell said a large number of self-employed workers were faced with surviving on a state pension after they retire as they have no private pension plan of their own. He explained that this was usually because the financial requirements of the business were usually been put ahead of pension savings.

Russell added that a state pension on its own will not be enough to guarantee a reasonable standard of living and urged people to start saving as early as possible to provide for their retirement.

In October 2012 the government launched auto enrolment for employees into a workplace pension scheme. Although the scheme will mean a boost in savings for workers it will not benefit the self-employed. The Association of British Insurers has also found that around a third of those now included in a workplace pension are unsure how they work.