Auto enrolment pensions on the horizon for self-employed workers
Who could forget the loveable looking purple and green monster ‘Workie’ with his unmissable ‘Don’t ignore the workplace pension’ slogan? Yes, it was the seemingly endless TV ads about the new workplace pension automatic enrolment.

The ads from the Department for Work and Pensions made a frequent appearance on our screens at the start of the year, as time ran out for employers to auto enrol employees into a pension scheme. As of February, every eligible worker should now be enrolled, as the change in law made it compulsory for employers to also pay money into the scheme.

Auto enrolment was brought in to stop workers from missing out on valuable pension benefits, as many had done in the past, and to encourage them to build up their retirement pots. With many people living longer and putting a strain on the state pensions, a private pension has become more important than ever.

Now, auto enrolment is being suggested for self-employed workers as well. The idea is that up to 5% of what they earn could be put away into a pension - with their permission - based on their self assessment tax return.

The Treasury Select Committee, who are behind the idea, believe the government should urgently consider the use of self assessments and National Insurance Contributions (NICs) to get self-employed people automatically enrolled - just as employed workers have been.

But some are questioning whether self-employed people should be forced into this way of saving for the future. A report from the Association of Independent Professionals and the Self-Employed has shown that auto enrolment may not be suitable for self-employed workers.

The report found that almost one third of self-employed professionals would stay auto-enrolled on a scheme. It also found that one quarter would leave the scheme to enable them to keep hold of more of their earnings and be able to access the money more readily. It concluded that there were other ways for them to set aside funds and save for the future, which the government and pensions sector should work together to find.

Watch this space!

Get in touch - If you'd like to find out more about how we can help you and your business pay less tax, generate more profits and create long-term wealth for you and your family, please get in touch now