Self-employment and job changes are driving pension cuts

Up to 1.7 million who became self-employed or changed jobs stopped retirement payments or cut back.

We urge retirement savers to think carefully about pensions despite cost-of-living pressures.

Workers deciding to become self-employed or change their jobs are contributing to a rise in people cutting back on retirement saving.

Our research* has found one in six (16%) of people who stopped pension saving entirely or who reduced contributions last year did so because of a change in their employment status.

That equates to around 1.7 million people out of the UK’s total of 45 million-plus retirement savers.

Around half who cut back or stopped payments did so because they have moved jobs while the rest stopped paying into a pension because they were self-employed and no longer had a pension scheme.

The good news is that people who have stopped or cut back do restart payments, the study found. Just 11% who have done so say they will never start saving into a pension again.

We help UK and international customers to consolidate their pensions. You can sign up easily at www.isipp.co.uk where both individuals and their employers can make contributions.

Our service is particularly suited to the self-employed or those who have become self-employed recently as they can combine all their existing pensions. Our research** last year found self-employed workers are nearly three times more likely to not be paying into pension funds compared with employees.

The study found 11% of the UK’s 4.2 million self-employed*** would increase pension contributions if they consolidated funds into one, while another 17% say they would make more regular contributions. Less than one in 10 (9%) say they have already consolidated funds into one.

iSIPP Managing Director Hrishi Kulkarni said: “The cost-of-living crisis is forcing many people to think hard about savings, and it may be easy to stop pension contributions particularly if you have just become self-employed and need to conserve your cash.

“In most cases where people have stopped pension savings after becoming self-employed or moving jobs they will restart retirement saving. But it is worryingly the case that the self-employed are most likely to not save into a pension as they don’t have an employer making the payment on their behalf.

“People should think carefully about stopping pension contributions as while it will save money to some extent in the short-term it will cost more in the long-term. People should also consider combining all their existing pensions as consolidation could substantially save money and help increase the funds available to them at retirement. iSIPP makes it easy to combine pensions, make contributions and give you control over your investments.”

Our free to set up service has no dealing charges or charges to transfer in existing pension funds and enables clients to create their own investment portfolio complementing our existing ‘Choice’ range of Ready-Made funds from world-leading fund managers BlackRock and Schroders.

Our digital pension consolidation service is available to all customers with UK pension funds who are working or have worked in the UK. Built around flexibility, we provide access to over 100 funds under our ‘Create’ option allowing users to build their own portfolio. Our ‘Choice’ range include Ready-Made Portfolios from world-leading fund managers BlackRock and Schroders. BlackRock’s multi-asset, risk-managed MyMap range of funds are available which include an ESG fund and we also provide access to the Schroders’s Shariah compliant fund. Focusing on transparency, the annual trust fee is £200 plus a 0.25% platform services fee. Funds with OCF (Ongoing Charges Figure) start at as low as 0.16%.

* Study conducted by independent research company Opinium among a nationally representative sample of 2,000 UK adults aged 18-plus between January 10^th and 13^th 2023 using an online methodology.

** Study conducted by independent research company Opinium among a nationally representative sample of 2,000 UK adults aged 18-plus between March 1^st and 3^rd 2022 using an online methodology.

*** https://www.statista.com/statistics/318234/united-kingdom-self-employed/

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The content of this article is for general information purposes only and should not be construed as legal, financial or taxation advice. You should not rely on the information contained in this article as legal, financial or taxation advice. The content of this article is based on information currently available to us, and the current laws in force in the UK. The content does not take account of individual circumstances and may not reflect recent changes in the law since the date it was created. It is essential that detailed financial and tax advice should be sought in both jurisdictions and any legal advice, if required.

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