The number of self-employed and contracted workers that continue to prepare for retirement by investing in a pension has seen a drastic reduction according to our sources.
This in part could be put down to the ongoing Covid-19 situation and the reduced or absence of income that many contractors have faced, placing many in a situation where they cannot afford to put aside money for their retirement. This of course will cause a shortfall for those affected meaning that when they do retire, the amount of income they receive could be significantly reduced if they do not reconsider their pension commitment and retirement planning.
As it is now part of HMRC legislation, all employees are required to be auto-enrolled into a company pension scheme. Unfortunately statistics show that most contractors when working through an umbrella will opt-out within the one month refund window. This will generally happen every time a contractor moves between umbrellas to the point that it becomes habit rather than something that they should consider.
A pension is something that we should all consider, especially as the Government’s attitude towards retirement is shown to be something that they are very serious about. With the pensionable age increasing alongside the average UK life expectancy, the current state pension as it stands is not a sustainable model for the Government to maintain.
The auto enrolment legislation is a result of the increase in average life expectancy and a persons pensionable years. This has already seen an increase from 2% (employees) & 3% (employers) to 3%(employees) & 5% (employers) and this number will most likely increase as time goes on.
Payments Pro specifically chose to work with Smart Pension to ensure that all of the contractors that work with us would have the opportunity to selectively manage their pension investment opportunities. By using Smart Pension any members can take a hands-on approach to managing the risk level of their pension, from low risk, to medium risk, to high risk as well as customising these levels to a more specific range.
Backed by Legal & General members are given the piece of mind through the experience and knowledge that the trust provides.
More information about our pension scheme can be found by clicking here