Aegon believes today’s self assessment deadline is a trigger for the self-employed to think about pension planning.
Kate Smith, head of pensions at Aegon, said: “As one of the fastest growing sectors in the UK, the gig economy has contributed to the huge rise in self-employed who are required to fill out a self-assessment tax return ahead of the deadline today (31 January).
“For those still wrestling with their self-assessment tax return, their main concern may be avoiding a £100 fine for late submissions. Missing the midnight cut-off cost UK tax payers over £87 million in fines last year.
“But ideally, completing a tax return should also be a trigger for thinking about pension planning. Figures suggest that only a fifth of self-employed people pay into a pension, as opposed to more than 50% of employees who now benefit from auto-enrolment.
“With pension contributions qualifying for valuable tax breaks, making contributions is a good way for the self-employed to reduce their tax bill, as well as make provision for their retirement, an opportunity that’s currently being overlooked by too many of the self-employed.”
Smith added: “We need to find ways to incentivise or nudge the self-employed into saving for their retirement. From next year, the system goes digital, presenting the government with the perfect opportunity to help push the retirement savings message direct to individuals with a self-employed tax code.”