Contractors and freelancers are focused on building up cash savings but that is hitting retirement savings, research* from Workwell shows.
The study by Workwell and IPSE found three out of four (75%) save regularly into cash accounts but just over half (51%) put money into their pension each month.
However, nearly half (47%) of the contractors and freelancers questioned are debt-free and have cleared any mortgages, credit cards or loans. Around a third (33%) of those questioned owe less than £100,000 in total.
Our research, conducted in collaboration with IPSE, found around two out of five (39%) of contractors, freelancers and small business owners save regularly into ISAs while around 34% regularly put money into other financial services products such as investments. Among those who do invest in pensions the average monthly contribution is around £218 compared with £215 a month going into cash accounts, £237 into ISAs and £184 into other financial services products. Chris Mollan, Head of Accountancy Services, said: “With interest rates rising rapidly in the UK it makes sense for contractors, freelancers and small business owners to focus on cash accounts and they may also need a cash buffer to ensure their business can continue to operate. “Ignoring other savings and particularly retirement savings, however, does come at a price and there are potentially tax benefits to be gained by making contributions into retirement savings via companies as well as tax benefits from other investments. “Running a business and doing the work is often challenging enough and many would benefit from expert support on tax efficiency.” * Workwell commissioned independent research agency Viewsbank to interview 1,447 adults aged 18-plus between July 6th and 18th 2023 including 398 who are self-employed, freelancers or contractors