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Quotations Compare & Buy Pensions Get Help or Advice Who looks after you financially now? So who do you think will look after you in retirement? The answer is the same we believe - YOU. As a self employed person you do not have the benefit of an employer looking after you and paying you when you are ill, you also will not have the benefit of an employer looking after you in retirement with a pension scheme. YOU must look after YOU What will the State do for you in retirement? Maybe not as much as your employed counterpart. When comparing an employed person with a salary of £30,000 and a self-employed person with £30,000 profit there is a massive difference in state retirement benefits. Employee Salary £30,000 per annum.Total Employees National Insurance Contributions paid = £2,790.92. In addition Employers National Insurance Contributions are paid = £3,247.62. Total National Insurance Contributions on behalf of employee = £6,038.54 v Self Employed Profit £30,000 per annum.Total Class 2 National Insurance Contributions paid = £104.00 In addition, Class 4 National Insurance Contributions are paid = £2,030.80 Total National Insurance Contributions on behalf of the s/e person = £2,134.80 That's a difference of £3,903.74 for tax year 2003/04 Yes, you may have saved some money in paying lower National Insurance - but are you saving it? In this example the difference is over £325 per month - Should it be saved in a pension? Assuming, that the above continued for a full working lifetime of 49 years (16yrs to 65yrs), with no changes to the current State Pensions system - the following benefits would be paid (based on today's benefits): The Employee would get a Basic State Pension £4,027.40 per annum (that's £77.45 per week) The Employee would also get a SERPS/State Second Pension £5,120.00 per annum (that's £98.46 per week) The Self Employed person gets Basic State Pension £4,027.40 per annum (that's £77.45 per week) The employee has more than double the state pension income FOR LIFE of the self employed in retirement - all because of the additional National Insurance Contributions paid by the employer and employee. Even if you pay additional voluntary National Insurance Contributions they will not provide you with this additional second state pension. It can only improve your Basic State Pension up to the maximum. YOU HAVE GOT TO LOOK AFTER YOURSELF - IF NOTHING ELSE WHY NOT AT LEAST INVEST THE NATIONAL INSURANCE DIFFERENCE IN YOUR OWN PENSION SCHEME. REMEMBER CURRENTLY FOR EVERY POUND YOU INVEST THE GOVERNMENT WILL INVEST OVER 28p ON TOP IN THE FORM OF TAX RELIEF Try our
regular savings pension contribution calculator to see what saving £325 per month extra would do for you. Use our
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