Self-employed workers benefit from significant advantages compared to full-time staff, but retirement is one area where they do not receive enough support.
While some contractors can independently save for retirement through their bank, company pensions are not available due to the nature of working for several different companies.
However, a new Lifetime ISA has been announced by the government, which was made available for April 6th. It has two main goals, which are saving for retirement or buying a property. It also provides a tax-free net around your savings of up to £15,240 in 2016/17 and is eligible for anyone between the ages of 18 and 39.
The maximum deposit rate is £4,000 a year until savers reach 50, with the government providing an extra 25 per bonus once the money is withdrawn after the age of 60. Any money taken out prior to then will result in a 25 per cent penalty.
While IPSE admits the Lifetime ISA provides benefits, the group warns that there are key improvements that should be made to it.
Firstly, the organisation wants to see the threshold increased to cover more people, particular as the average age of freelancers is now 47, putting them outside of the eligibility criteria.
IPSE also wants to see the financial penalty reduced or removed in order to assist those self-employed professionals who have variable incomes.
Lorence Nye, IPSE economic policy adviser, said: “There has been a long-term saving crisis for the self-employed for some time.
“The new Lifetime ISA, therefore, is certainly a step in the right direction and the young self-employed, in particular, would be wise to take advantage of it.”
Mr Nye went on to warn savers that the 25 per cent penalty for removing finances proves that the financial package is not for everyone.
While saving can be a challenge for self-employed professionals, this new legislation could be seen as a step in the right direction. Finances can be complicated even without adding in savings, but there are specialists available who can offer the assistance required.
Freelancer and contractor accountants can work out the exact take-home-pay for professionals, allowing them to gain a better understanding of their earnings and better prepare for the future.
These same experts can also offer any guidance required to help self-employed individuals make the most of their time at work. Whether you’re experienced or new to the industry, Brookson specialists can make you feel more at ease.