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female freelancers on edge over pension poverty

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Over 7 in 10 (71%) freelancers are worried about saving for later life following COVID-19, with female freelancers most likely to be affected, according to research carried out by IPSE (the Association of Independent Professionals and the Self-Employed) and mortgage provider CMME.

  • Only 1 in 10 self-employed workers (12%) are planning to purchase a property in the next five years.
  • 50% of freelancers expect that they will be treated unfairly by mortgage lenders.

Almost 4 in 5 (78%) self-employed women said they are concerned about saving for later life compared to 69% of men. Moreover, women are more likely to not be saving compared to men (20% compared to 12% respectively).

If you are a male reader, you may not think this affects you, but it will if your partner is self-employed and not actively saving into a pension or another form of investment, such as property.

The new research saw 624 UK freelancer workers asked about their attitudes towards savings and mortgages. It found that despite the record increase in first-time buyers post lockdown, only 1 in 10 self-employed workers (12%) are planning to purchase a property in the next five years.

The research also found that freelancers are sceptical about how they will be handled by mortgage lenders. While almost 1 in 5 (19%) believe that they will be treated fairly by lenders, 50% believe that they won’t be. Moreover, almost 2 in 5 (38%) freelancers that have obtained a mortgage in 2021 found the process of getting one either somewhat or very difficult. For context, this represents a 57% increase since 2020.

When freelancers get on the property later in life they are less likely to generate sizeable equity in their property before retirement than those that have purchased in say their 20s or early 30s. This is especially the case for female freelancers given they are battling the gender pay gap.

The Major Players 2021 Salary Survey demonstrated that more women are entering the digital, marketing and creative industry than men which is highly encouraging. They are also earning more than their male counterparts both at entry and mid-level. However, this trend declines when the salary band reaches £50,000+, with men 3 times more likely to earn upwards of £100,000.

Government support for freelancers

While government schemes like the Self-Employment Income Scheme (SEISS) provided some freelancers with a lifeline during the lockdown, there are signs that accessing the support could have a serious negative long-term impact on the financial wellbeing of the self-employed sector. According to the research, 2 in 5 (40%) people who accessed the Self-Employment Income Scheme (SEISS) during COVID-19 fear that they could be penalized in a mortgage application.

“Today findings are a wake-up call for lenders and the government. While the focus in recent months has been on economic challenges like supply chains and rising inflation, more attention needs to be given to self-employed workers, who have taken the brunt of the pandemic,” said Andy Chamberlain, Director of Policy at IPSE (the Association of Independent Professionals and the Self-Employed).

“The government needs to work alongside the financial sector to alleviate the barriers preventing more freelancers from accessing financial products. Around 1 in 7 working people in the UK are self-employed. Not only do we have a responsibility to ensure they have the same ability to save and buy a home as everyone else, lenders should recognise the self-employed make up a huge and potentially lucrative market.”

Andy Chamberlain, Director of Policy at IPSE

“The past year and a half has derailed freelance work, with many self-employed people seeking help from SEISS and other financial schemes,” said Mike Coshott, CEO at CMME.

He continued: “While many have been able to generate regular work and income post lockdown, today finding’s around savings show that freelancers still bear financial scars from the pandemic.”

Auto-enrolment for the self-employed

Auto-enrolment has greatly expanded participation in workplace pension saving. Yet certain groups are not benefiting from the system, including self-employed people, The Freelance Informer previously reported.

In the UK, around 4.3 million are in some form of self-employment, but it’s estimated that only 16% of them are actively saving into a workplace or personal pension. This compares to 88% of the working population eligible for auto-enrolment through their employer.

Related articles:

Inside IR35: How do contractors work out their income to apply for a mortgage if their tax status has changed? – Freelance Informer

The Midlife Pension Review: why freelancers and founders need one more than most – Freelance Informer

Former pensions MP says government wants to sweep away Pension credit protection even though it was never part of triple lock in the first place – Freelance Informer

Pension tax is pushing NHS doctors into early retirement. Will locums fill the gap? – Freelance Informer

Construction workers headed towards pension poverty – Freelance Informer

Experts reveal 2022 property market predictions – Freelance Informer

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