Pension Reforms – Employed or Self-employed?

Britain is being hailed as the “self-employment capital” of Europe, giving people who work for themselves plenty to celebrate. But, for many, enterprise will come at a cost, with inadequate pensions and lower incomes later in life. The Government has introduced pension reforms, in the form of “auto-enrolment”, which will get millions of people saving into pensions for the first time. But not the self-employed. In fact, they stand to lose out. Unlike employees of firms, who will be automatically placed into a pension into which their employer and the Government will contribute, self-employed people get nothing under the flagship reforms. Instead, the changes will sting those who employ staff, as they will have to fork out for employees’ pension contributions on top of their wages and other business expenses.

Self-employed people who miss out on a lifetime of employer contributions forgo an average of ￡91,500 in company pension scheme contributions.  Ouch!