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Pension Problems Ahead For Self-Employed – Take Action This Year

Starting a pension plan isn’t easy for those who are self-employed – you’ll need to find the pension scheme yourself, you don’t have any employer contributions to boost it, and it’s difficult to stick to a regular savings plan when you might have irregular income.

This does not constitute advice and advice should be sought in all instances before acting on it.

Being self-employed comes with a lot of benefits – particularly for medical and dental professionals looking to have control of their career – however, a pension is not one of them. This is why the Department for Work and Pensions (DWP) is trying to increase the number of self-employed people with pension coverage.

Since the launch of auto-enrolment almost seven years ago, close to 10 million people have joined a workplace pension arrangement. The success of the initiative has far exceeded what was expected, with a 2016/17 calculation putting the opt-out rate at just 9%.

Options for the self-employed

Unfortunately, auto-enrolment isn’t available to the self-employed. And since the self-employed population accounts for approximately 15% of the UK workforce – which equates to 4.75 million people – it’s actually quite a problem.

Even with the tax benefits that are available with coverage, private pension coverage is severely lacking with self-employed individuals.

In fact, according to the DWP, just 1 in 7 self-employed people are contributing to a pension plan.

In an attempt to rectify this situation, the DWP has announced a new programme of trials designed to kick-start a retirement savings plan for the self-employed. Included in the trials are a range of trade bodies and financial services organisations. NEST, the top government instituted auto-enrolment pension scheme with over 7 million members is involved as well.

Start your pension savings plan

If you forego a private pension, your state pension will be all you’ll get. That’s just £168.60 a week (£8,767 a year) from April 2020 if you’re up to date with National Insurance payments. You’ll also need to wait until you’ve reached retirement age before you’re eligible for a payout.

If you are early on in your career, it should be easy to put in place a moderate savings plan and catch up to where you should be. If you are close to retirement and don’t have a plan, you will need a much more aggressive plan.

Don’t hesitate to get help with building your pension plan

If you’re a self-employed dentist or doctor and haven’t yet begun to save, consider working with an independent financial adviser to begin mapping out your retirement savings plan.

While the retirement age will be upped to 66 by this October, it’s expected to increase to 67 by April 2028. If you’re not set to retire for a while, the minimum age might have increased even more by the time you get there, so best to prepare for any and all eventualities.

Don’t delay pension planning. Get in touch with our financial planning experts to get help with your strategy today.

Self-employed? Start planning for retirement
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
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