Retirement Money News

A new pension provider has been launched that is targeted towards the self-employed and more specifically freelancers.

Penfold is targeting the 15% of the UK workforce who are currently self-employed and has stated that it aims to revolutionise the pension industry for UK freelancers. According to figures released by Penfold, five million workers are currently self-employed and, of these, 86% currently do not save into a pension. The company is hoping to change this by offering self-employed workers with a pension that is clear, simple, digital and can be activated in under five minutes.

Once the pension is activated, contributions can be paused, topped up with a bonus and combined with multiple pension balances. Penfold states that users can choose where their money is kept or invested, and the dashboard explains how much they have saved and how far off they are from their ultimate end-goal.

Pete Hykin, co-founder of Penfold, explained: “We know that auto-enrolment has increased participation in pensions to 80% among the employed, but this hasn’t helped the millions of UK self-employed.

“It’s almost like the self-employed, who we know are the backbone of the economy, are being ignored by the Government and UK industry. There are absolutely no pension options out there that adequately serve those working for themselves.

“We’re aiming to make pensions not just easier, but more attractive for self-employed people to start planning for later in life. Often people put off setting up a pension due to the amount of understanding needed, the volume of paperwork and even just the fact that it can involve calling multiple providers to find the best option. Our research has shown the scheme needed to be flexible and adapt to the end-user, not the other way around.”

Chris Eastwood, co-founder of Penfold, added: “Pensions for the self-employed is just phase one of the Penfold plan. The great thing about the pension industry is that there’s so much room for improvement – whether it’s the option of setting up or paying into a pension for your children, giving people more visibility and control over the environmental or social impact of their pension investments, or even earning rewards like airmiles for every contribution. Our aim is to make pensions as accessible and engaging as banking has become.”

New research published this week by equity release lender, more2life, reveals that 35% of over-55s say their expenditure already exceeds their income. In fact, more than two-thirds (68%) of these are using their cash savings to plug the gap and around a third plan to use a credit card or their bank account overdraft to cover their income gap.

Over half of those surveyed did not have enough in cash savings to cover an unexpected bill of £5,000 and 12% would need to borrow money to pay for a sudden event such as a boiler breakdown.

A further 25% believe that the increasing cost of living will push them into the red this year.

An official report by the pension regulator revealed that 10 million employees had joined a workplace pension scheme by March this year.

According to the report, by March 2013 just 1 million employees were signed up to a workplace pension scheme, however this had increased to 10 million by March 2019, an increase of nine million in just six years. The report also revealed that in 2019, 85% of eligible employees have joined a workplace pension scheme, a sharp increase from 42% in 2012. In addition to this, during 2018, it is estimated that £90.4 billion was saved into the workplace pension scheme, an increase of £16.8 billion from 2012.

Most people in their 50’s may not have enough savings in their pension pot to fund a comfortable retirement, according to recent research by Sunlife.

Worryingly, while the average pension pot for 79% of those surveyed was £146,666, the remaining 21% of those in their fifties did not have any private pension provision at all.

According to a report from The Pensions and Lifetime Savings Association to enjoy a moderately comfortable retirement – that covers basic expenditure and a few luxuries such as a European holiday – the average retiree would need an income of £20,200 a year. Those aspiring to a more affluent retirement – such as more than one foreign holiday and some home improvements – will need nearer £33,000 a year.

In comparison the Office of National Statistics reports that the average salary for full-time workers in the UK is currently around £29,009.