News, insights and advice for contractors
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Saving for the future and for retirement is important but it can often be pushed to one side to make way for other expenses and the cost of living. Studies show that many contractors are not saving enough for the future, while some have not started saving for their pensions yet.
As a contractor you are responsible for saving for the future, whether that be in the form of a pension plan or by other means.
Procrastinating putting the funds aside for a pension pot can have negative implications later on in life, although you may not see the effects now, and mean more years of working when other peers are retiring. It will be harder to save enough money later down the line and you may not be able to live a comfortable standard of retired living, if you don’t start now.
Why are contractors not saving?Many contractors work on short-term projects and jump from assignment to assignment and for some, work can be unpredictable. Due to the nature of their work, some worry about how to save in between projects, and struggle with putting money aside each month. They end up looking only at the short term rather than long term which can come as a shock when reality settles in.
Is it the same for employees?On the flip side, according to the Department for Work and Pensions (DWP) 91% of employees are auto-enrolled into a pension plan, which is a legal requirement for permanent employees, where the employer also contributes to the employee’s fund. This initiative is helping to steer people into saving for their future and retire with a good standard of living.
For limited company contractors, people who own their own company, there is a tax benefit to saving for a pension - our sister company 2020 Accountancy can advise you more if you’d like to establish whether becoming a limited company could be more beneficial for you.
Umbrella contractorsThere is good news for contractors who are looking for a way to save into a pension. As a contractor, if you decide to work with an umbrella company, you will be auto-enrolled into their chosen pension plan, just as you would if you were a permanent employee.
When you work with NWM umbrella services, you become an employee which gives you all the benefits that come with being an employee (including holiday and statutory sick pay). You can reap all the benefits of being a contractor, moving from client to client, or assignments and arranging a flexible work-life balance where you desire to work, but you can also miss out on the hassle of payroll. Your pay is our priority, leave the money and finances to us while you focus on your business.
If you enjoy the contractor lifestyle but cannot see how to save for the future at the moment, we’d value the opportunity to speak with you to explain the benefits of coming under an umbrella. Get in touch today to find out more.The question is: Are you saving enough for the future?