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Self-employment jeopardises state pension

The growth of self-employment is putting pressure on the sustainability of the state pension, research has found.

According to analysis from Aegon, £2.8 billion is lost in national insurance (NI) receipts for every 1 million people who move from employment to self-employment.

The challenge has arisen since reforms to the state pension were introduced in 2016, giving self-employed people the same state pension entitlement as employees.

Because their NI contributions were not increased at the same time, analysis shows this could lead to a shortfall in the receipts that are used to fund the state pension.

Self-employment has become an increasingly popular option, having grown by 1.5 million people in the last 16 years.

Steven Cameron, pensions director at Aegon, said that increasing NI contributions for all self-employed people is not the answer to this challenge.

Cameron added:

"Compared to their employed peers, the self-employed are not benefitting from automatic enrolment into a workplace pension with an employer contribution, and miss out on other benefits like maternity and paternity pay.

"The government needs to balance these considerations when looking at how to find a fair way of maintaining the state pension system."

Talk to us about your pension planning.

Why Clients Choose Easy Accountancy

Easy Accountancy offers a low cost, fixed fee accountancy package with all clients receiving their own dedicated, friendly, approachable accountant.

All of our accountants specialise in providing accountancy services to the self-employed, freelancers, sole traders, small to medium sized limited companies and private individuals. All accountants are employees of Easy Accountancy and we never outsource or offshore work.

Our low cost, all-inclusive fixed-fee accountancy service includes unlimited access to your own dedicated accountant throughout the year and covers all your business and personal tax affairs needs.

All our accountancy services include:
  - Unlimited access to your accountant
  - Ongoing advice on how to manage your business
  - Proactive tax advice throughout the year
  - Updates and reminders so you'll never miss a deadline
  - Free bookkeeping software

As a sole trader our fees start at just £60 + VAT a month, for this you receive the above plus:
  - Completion of your Self-Assessment tax return
  - Advice on how much Income Tax to pay
  - Guidance on National Insurance contributions

As a limited company our fixed fee packages are bespoke to your needs, however typically you’ll receive the above, plus:
  - Completion of your year end accounts*
  - Completion and submission of your annual return Companies House
  - The director/s Self Assessment tax return
  - Payroll bureau
  - Dividends and corporation tax computations

We’ve saved our clients up to half on their accountancy bills – if you’d like a quote, click on the quote me button to the right of this page. Alternatively, call us on 01442 275767 or email newbusiness@easyaccountancy.co.uk.

*If you would like us to complete your company year end accounts we simply ask that you have been a client of Easy Accountancy for one year or have made 12 monthly payments.