LEBC Group has welcomed a government consultation on helping the self-employed save for retirement and has proposed two measures to “level the playing field” between the employed and self-employed.
LEBC believes the government could extend the £500 per year tax-free financial advice allowance, which is available to employees, to the self-employed too.
It also thinks that the government should reintroduce carry back of pension tax relief, so that decisions on how much to save in a scheme can be made after the year’s profits are known.
LEBC director of public policy, Kay Ingram commented: “We believe these two simple changes, both in the Treasury’s gift, could help the self-employed build firmer foundations for their family’s future and would go some way to redress the imbalance between the support offered to employees but denied to the self-employed.”
According to Office for National Statistics data, only 25 per cent of the self-employed are currently making regular provisions for their retirement.
Furthermore, 45 per cent of those aged 35 to 55 have made no private pensions at all. It is these figures that have persuaded the Treasury to announce its consultation on ways to rectify the situation.
LEBC noted that there are a number of factors that mean the self-employed face “many more obstacles to planning for their retirement” in comparison to employees.
These include that they have no support from an employer when it comes to funding their retirement savings and have to find a “suitable pension plan” to pay into.
They also have to choose an investment strategy and keep track of its performance, deal with varied earnings and qualify for far less support from the state when they are in ill health.
LEBC argues that these “short-term pressures” can make planning for the longer term “a low priority” and some self-employed allow pension savings to take a back seat.