Self-employment booms amongst women- but pensions suffer
More and more women are taking the plunge and becoming self-employed according to research from a leading insurer. The number of women working for themselves has hit an all-time high of 1.5m1 .
According to research from charity Citizens Advice2 , many of these self-employed women work part time. Two-thirds of people who work for themselves on a part-time basis are women, compared with just one in five who are full time self-employed. Examples of women working part-time self-employed include a bookkeeper who works three hours a day while her children are at school or a graphic designer who takes on work she can fit around caring for her elderly parents.
SAVING FOR THE FUTURE
However, when it comes to saving for a pension, self-employed women are missing out. According to Prudential’s research1, just 12% contribute to a personal pension
compared with 59% cent of employed women who pay into schemes operated by their employer.
If you’re self-employed, saving into a pension can be a more difficult habit to develop than it is for those in employment. Irregular income patterns can make regular saving difficult. But there are plans available that can give you the flexibility you need, and the good news is that your contributions are topped up by income tax relief from HM Revenue & Customs. If you’re a basic-rate taxpayer, for every £100 you pay into your pension, HMRC will add an extra £25.
How much should you aim to put aside to ensure you build up an adequate pension pot? The simple answer is probably as much as you can reasonably afford. If you were in an employer scheme, your employer might typically contribute 4% and you might be contributing a further 3% yourself. So it makes sense to discuss with your financial adviser the level of contributions you can make and the likely returns they would produce for you.
Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.
1 Prudential, Self-employment booms among women, April 2016
2 Citizens Advice, Women and parents driving growth in part time self-employment, April 2016