Pension system 'may be failing self-employed'

New private pension figures published by HMRC have revealed that the number of self-employed people contributing to a personal pension climbed to 340,000 in 2021-22, up from 330,000 the previous year. During the year, self-employed people contributed £2.3bn to their personal pensions, up from £2 billion in 2020-21. Despite the modest growth Rachel Vahey, head of policy development at AJ Bell, reckons the current system may be failing the self-employed. She wants more done to understand how self-employed pension savers are using pensions, ISAs and other investments to build up a nest egg for retirement. She said: “Half a million new pension savers were created in 2021-22, but only 10,000 or 2% of those were self-employed. Although total pension contributions by the self-employed also edged up, it’s growing increasingly obvious that more needs to be done to help this segment of the population save for retirement, with less than one in 10 self-employed workers paying into a pension annually.” She said policymakers need to pay the self-employed more attention and that there needs to be a wider debate on how to encourage the self-employed to save more. Ms Vahey said that while both SIPPs and Lifetime ISAs offer the self-employed a good way of saving for their future while benefiting from a government bonus, the country needs to investigate whether these products can be tweaked to make it easier for people to save. The HMRC figures also showed that the number of people who are members of a personal pension increased from 7 million in 2020-21 to 7.5 million in 2021-22. HMRC said the estimated cost of pension income tax relief and national insurance contribution relief rose to £68.8bn in 2021-22, up from £67.3bn the previous year. The HMRC stats are available here

Pension system 'may be failing self-employed'

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