HR ยท 7 April 2016

Self-employed make biggest gains from new pension rules

Self-employed could now be entitled to up to ?36.35 a week more in retirement
Britain?s self-employed workforce have made stand-out gains from the government?s new pension rules, which went live on 6 April.

The self-employed are now entitled to up to ?155.65 a week once they reach state pension age, compared to a previous maximum entitlement of ?119.30.

With many individuals now spending over 20 years in retirement, the ?36.35 a week increase could see some self-employed gain up to ?40,000 more than they previously could.

Despite this, a recent survey conducted by pensions specialist Aegon revealed that just 30 per cent of the UK?s self-employed know about the new pension measures.

Aegon pensions director Steven Cameron said: ?For those self-employed individuals who reach state pension age today, it?s a case of ?What a difference a day makes?. The self-employed were previously excluded from the additional earnings-related pension.?

Although the increase will be welcomed by the vast majority of the growing number of freelancers in Britain, it is unlikely these workers will be able to earn more in retirement than company employees.

?Unlike employees, this group are not benefitting from automatic enrolment into a workplace pension scheme, making it even more important to make adequate private pension provision for themselves,? Cameron went on to say.

?While this may come as a very pleasant surprise to the growing number of self-employed who reach state pension age in the future, even at the higher level it is unlikely to provide a comfortable lifestyle in retirement,? he added.

As a micro business leader, what are the important questions you need to ask when it comes to pensions? Read our expert’s advice.

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Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.