In an open letter to Guy Opperman MP, Minister for Pensions, LEBC responded to the Minister’s recent call for suggestions to help improve retirement provision for the self-employed.
According to LEBC there were two key suggestions which would benefit self-employed workers.
Firstly, that the £500 allowance that employers are accorded to enable them to provide employees with financial advice be provided for the self-employed, and, secondly, that the facility, (removed in 2006) to allow self-employed tax payers to pay pension contributions in the current tax year but have these contributions offset against the previous year’s earnings or profits, be reinstated.
LEBC believes the ‘carry back’ was “particularly helpful to those who have fluctuating earnings and are not confident of their final figures until after the tax year end.”
Without it the firm warned many self-employed and others with variable earnings found it difficult to budget for regular payments into pensions with confidence.
Restoration of carry back would “greatly assist the self-employed and other gig economy workers.”
Jack McVitie, chief executive at LEBC, said: “Lack of financial security is a key concern of many self-employed, around retirement planning, making provision for ill health and protecting dependants on death.
“Employees have benefited greatly from auto enrolment and enjoy employer sponsored healthcare, sick pay and life cover.
“The self-employed not only have to fund these themselves but also source advice on a suitable package of measures to provide them and their families with financial security.
“We are aware of the barriers which many self-employed people face in accessing appropriate advice.
“We have cut the cost of advice and fill the advice gap through our bionic advice model, which combines technology with human interaction, enabling us to deliver regulated advice to more people at an affordable cost.”
He added: “We realise that these measures would require the co-operation of the Treasury but see them as modest steps in line with the Government’s stated aim of promoting better financial security in the self-employed and gig economy sector.”