Self-employed trade union Community has warned that freelancers in the UK face a pension “black hole”, with contributions dropping and more dipping into their savings as a result of the COVID-19 pandemic.
Community revealed new figures which showed that around 67 per cent of self-employed workers in the UK had turned to their personal savings to help their finances due to COVID-19’s impact on their income.
This comes shortly after new statistics from the Institute for Fiscal Studies (IFS) revealed that the number of self-employed workers making pension contributions has dropped from 48 per cent in 1998 to 16 per cent in the present day.
In an earlier study undertaken with Prospect and the Federation of Small Businesses, Community had found that around half of self-employed people had seen their household income drop by between 60 – 100 per cent during 2020.
In light of the new data, Community has said that more needs to be done to help ensure that self-employed workers do not suffer from financial difficulties during retirement.
Community’s Head of Policy, Research and External Relations Kate Dearden said: “The UK has over five million self-employed people. Even before the pandemic, the issue of their pensions is one that has been rumbling below the surface. Now, with coronavirus taking a massive economic hit on us all and millions having to rely on their savings just to get by, this threatens to emerge into a real crisis.”
“Pensions can often seem like a distant afterthought for many of us, but the reality is they’re something we should all be thinking about. Our population is ageing and more of us are living longer. That’s a fantastic thing, but if this pension black hole continues to grow this will become a ticking time-bomb under our country.”
