More than 1.3 million people will pay a high price for being their own bosses as their failure to build up their retirement savings could force them to carry on working for as long as they possibly can, a report claims. Too many will only have State Pension to fall back on, but that is one of the worst in the developed world.
The pandemic has been particularly hard on the self-employed, as more than half of those who work for themselves lost income as a result.
That is almost double the national average, according to the Scottish Widows Retirement Report.
The Government launched the Self-Employment Income Support Scheme (SEISS) to help self-employed workers, but many fell through the gaps as successful applicants needed to have worked for themselves for at least two years.
Up to three million self-employed workers got got no Covid-19 financial support whatsoever as a result, according to campaigning group Excluded UK.
Incredibly, one in seven self-employed workers went more than six months without receiving any income at all.
One in three are saving nothing at all for their future, while a further third are saving less than they need to retire in comfort.
Pete Glancy, head of policy at Scottish Widows, said too many self-employed never get started with their savings. “Covid fallout has left many struggling to make ends meet, let alone save for their future.”
More than a quarter of self-employed workers are now considering returning to employed work because of the challenges they face, Glancy said.
Digital consultant JT Joseph, 37, worked through her own limited company for six years, contracting out her services around the world, until the pandemic struck.
She earned almost no income between June and October last year, as all her contacts were put on hold.
Worst, her savings had already been depleted because she took three months off work to recover from surgery in 2019.
JT, from Cambridge, started a new contract that November but the pandemic struck before she had rebuilt her savings. “I had no income but still needed to pay bills to maintain my business, such as accountancy costs and corporation tax.”
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JT was ineligible for SEISS, being a company director, and also could not benefit from furlough or council Covid support schemes. “I took out a loan under the Bounce Back Loan Scheme, but now I’m paying this back too.”
With daily life and financial struggle it is too easy for the self-employed to put pension savings on the back burner.
The self-employed cannot access the workplace auto-enrolment scheme, which has granted company pensions to more than 10 million employees since 2012.
They must save under their own steam instead but too many are failing to put away any money at all.
Alan Thomas, UK chief executive at Simply Business, said fewer have been hit harder by the pandemic than the self-employed, with many livelihoods on the line.
He called on Chancellor Rishi Sunak to offer support. “For the UK to recover from the effects of the pandemic, we need small businesses to bounce back.”Internet Explorer Channel Network