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Too many contractors not set up for retirement

Too many contractors not set up for retirement

It’s a subject we at Larsen Howie have touched upon before, but is something every contractor should never turn a blind eye to.

Pensions might seem like a world away for some workers, but come a certain time in any professional’s life, it naturally takes on a new level of importance.

For contractors, when compared to others workers, the lack of automation around putting money aside for post-retirement can be something of a hindrance.

Plenty of contractors have concrete pension plans in place, but research released this week has found that almost 75% of those who work for themselves, including contractors, don’t have a personal pension.

The latest Drewberry Wealth & Protection Survey has found that the average self-employed Briton is falling far behind in terms of their earnings, pension and insurance provision.

While 73% of those surveyed don’t have a personal pension, more than half that do don’t know how much is in their pension kitty.

A vast majority, 91% in fact, put less than 10% of their pay each month into their pension.

The research also found that 34% of people who work for themselves in the UK didn’t start to put money into their personal pensions until the age of 36.

“The long-term nature of a pension means that there’s a huge ‘opportunity cost’ to starting a self-employed pension plan later in life,” said Tom Conner, a director at Drewberry.

Drewberry also recently calculated that a self-employed pension plan started at age 25 will see that worker have double the pension pot of a worker who starts at 35 by the time 65 is reached.

It might not be at the top of every contractor’s priority list, but pensions are undoubtedly a vital thing to consider that unfortunately, as a contractor, don’t just appear in front of you.