Tag Archive | "small business owners"

UK “The Worst” for Self Employed Pensions

A team of pension experts recently took to the streets of 15 countries around the world and their findings were not exactly surprising.

Out of the 15 countries across Europe, Asia, the Americas and Australia, it was the UK that was ranked “the worst” for how many self employed people had their pensions sorted out.

Regular readers of this blog will be only too aware about how I’ve reported that many contractors, freelancers, and small business owners are just not educated enough about self employed pensions. Unfortunately, they are going to find out the harsh truth when they get to retirement age.

Looking at the numbers, the team of pension experts were shocked to discover that only 52% of the 4.2 million self employed people in the UK did not have any kind of independent pension. So that is a lot of people that have decided to rely solely on the government State pension, which in my opinion, might not even be around in 20 years time.

Compare this to an average of 36% that did not have a pension across the other 14 countries, and it becomes clear that in the UK we really need to push the message across to every self employed worker out there…

“You need to get your pension sorted…ASAP!”

I’m sure this is what they have been doing in India where only 12% of those surveyed mentioned they had no plan for a retirement pension. So that is 88% who have really got their act together it seems. Well done India. UK take note.

Actually, one of the main reasons why India are so clued up when it comes to the subject of independent pensions for the self employed is because they have no welfare system like here in the UK.

The same can be said for Brazil, China and Turkey as well, where the majority of those surveyed said they were actively saving into a pension.

However, the same can’t be said about countries similar to the UK that also have a welfare system, because France, Spain and Australia only did a bit better than over here, with many clueless about what to do for their retirement.

One thing I do know is that the team of pension experts must have been baffled when roaming the streets of the UK and talking to the self employed people of our nation.

I can imagine the look of bemusement on their face as…

Only 10% of those who have a retirement plan had it written down.

56% said I don’t have any kind of plan.

52% expected to be working past the age of 65.

49% said they plan to rely on the State pension from the government.

My advice on this, if you are self employed and don’t have any kind of plan for retirement and your pension…get it sorted as soon as possible. It really is the only way, because you don’t want to be still working when you are 75, or even 80.

The government are thinking about bringing in some kind of auto enrolment scheme for the self employment, similar to what they have in many companies for employees. Although it might be a while until we see that happen.

For now, you really need to take control of your own situation.

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How much are umbrella company contractors saving for their retirement?

It’s not only small business owners who are going to have to keep on working past normal retirement age, according to the Pensions Policy Institute.

According to the Institute’s research, millions of us will still be working after our 75th birthday because we have not been making adequate financial provisions for our retirement. A whopping 45% of people aged over 50, and that includes contractors, will have to carry on working for 11 years longer than they had originally hoped in order to have a comfortable retirement.

Life expectancy has increased over the last three decades and although the government has raised the normal retirement age slightly, this in no way compensates for the fact that we are living longer.

Joanne Segars, the National Association of Pension Funds’ chief executive, said millions of Brits are in for a rude awakening when they realise they haven’t enough money to retire. People who don’t want to see their living standards fall either need to save more or work longer.

The pensions gap in the UK is the largest in Europe and Aviva says that we should be putting an extra £10,300 into our pensions each year if that gap is going to close completely. But can anybody really afford to put away £200 a week into their pension fund when some people don’t even earn that much over the entire year?

The problem is made worse by falling annuity rates. A pension fund that guaranteed a lifetime income of £15,640 at the beginning of the 1990s is worth just £5,800 a year now.

You’re never too young to start saving for your retirement! The sooner you start, the larger a pot you’ll have to draw on when you do eventually do decide to sit back and take it easy.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: help a piggy-from-the-future out? by {Guerrilla Futures | Jason Tester}

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Employment is up but small businesses still need more support

The latest employment statistics, released by the ONS last week, showed a 0.1% decrease in the unemployment rate.

In the quarter ending February 2012, 2.65 million people were without a job in the UK, a quarter-on-quarter drop of 35,000. Despite this, there were around 170,000 more people without a job than there were at the corresponding time last year, an ONS spokesman said.

It is thought that the increase can in some ways be attributed to a rise in the number of people accepting part-time rather than full-time positions.

The latest report also showed that base salaries rose by 1.6% in the 12-month period, but bonus awards in the first two months of this year were lower than they were in January and February last year.

The FPB believes that the employment rate would rise further if the government stuck to its promise of cutting red tape for small business owners. Phil McCabe, the Forum’s senior policy adviser, said the coalition needs to reduce bureaucracy and improve the tax system if Britain’s small businesses are to stimulate the jobs market.

David Cameron is relying on small businesses to drive economic growth but they need incentives, he added. The FPB has repeatedly asked the government to extend the National insurance Holiday to all firms and not just those in specific areas of the country. Furthermore, Mr McCabe would like employment law simplified so that employers have more control when it comes to staffing decisions.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: 146 – Scaffold poles by MrB-MMX

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