Pension shortfall for self employed

Pension shortfall for self employed
Published:  10 Jun at 9 AM
Recent research by Prudential has revealed that self employed people will miss out on employer contributions to their pension funds that could be worth as much as £90,000. The insurer claims that over a working life of 41 years someone earning £26,664 a year will pull in £2,232 annually in employer contributions.

Prudential’s Stan Russell, a retirement expert, explained that many self-employed could find themselves struggling on a state pension. He explained that this was because the needs of the business were usually prioritised over putting money aside for retirement.

At the end of last year the government introduced auto enrolment. The scheme automatically puts employees into a pension programme. Financial experts have warned that a state pension is not enough to guarantee a comfortable lifestyle after retirement and are urging people to save as much as possible as early as possible.

Pensions research head at Hargreaves Lansdown, Tom McPhail, said in order for auto enrolment to be a success it was vital that people shopped around for the best annuity. He explained that getting the wrong deal could mean losing out on thousands of pounds per year.

TUC pensions policy officer, Craig Berry, said it was not enough to simply encourage people to save a bigger pot for retirement if they are not going to get the best possible deal after they eventually invest in an annuity.