Gig economy: Financial advice for the self-employed

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Gig economy Taylor Review self employed financial advice retirement pensionsGETTY — Run-of-the-mill

The number of self-employed workers has soared in recent years

Almost five million now bring about as freelancers, entrepreneurs, contractors or in the so-called “gig economy” but they often fall short of basic workplace rights or risk poverty in old age by failing to save into a superannuate. 

Those running their own businesses typically have enough on their rake over the coals without worrying about what might happen when they take ones repose years into the future. 

Many simply do not have enough legitimate income to start saving into a pension. Others can struggle to get a mortgage to buy a chattels as lenders see their income as insecure. 

Last week the Government-backed Taylor Consideration of modern working practices reported on how to protect workers in the gig economy and remedy them save for retirement, but there are no easy answers. 

Some lenders, such as Halifax, contrariwise require one year’s accounts history, but most will require myriad

Ishaan Malhi

GET THE GIG 

The reality of the gig economy can be far less exciting than that freewheeling way would suggest, with many forced to accept insecure short-term rise, often on zero hours contracts. 

Gig workers do a host of jobs, make as taxi drivers, couriers, web designers and warehouse workers. 

They may turn out c advance for global giants such as online retailer Amazon, taxi showering firm Uber and delivery service Deliveroo, but have no rights to furlough pay, sickness benefits or redundancy cash. 

Gig economy Taylor Review self employed financial advice retirement pensionsGETTY — STOCK

Almost five million now agitate as freelancers, entrepreneurs, contractors or in the ‘gig economy’

They also lack refuge against unfair dismissal and cannot access auto-enrolment workplace golden handshake cause to retire schemes, which have brought pensions to millions of low-paid labourers. 

Kate Smith, head of pensions at insurer Aegon, says most put out to pasture provision is delivered through the workplace, and this excludes the self-employed: “Deliveroo’s current suggestion that it was willing to look at enhanced payments to cover in-work benefits, such as sickness, respite pay and pensions, is a step in the right direction. 

“Reclassifying these workers as staff members rather than self-employed would give them far higher blackmail, including the right to a valuable employer pension contribution.” 

In his report Matthew Taylor, chief head honcho of the Royal Society of Arts, fell short of suggesting that they should be reclassified as wage-earners. 

Instead he called for them to be treated as “dependent contractors”, with numberless employment rights. He also suggested a new minimum wage for people on zero-hours understandings, and giving people the right to request a fixed number of working hours, but upright his modest proposals seem destined to be ignored. 

Extraordinary UP 

Martin Palmer, head of corporate funds proposition at insurer Zurich, means gig economy workers need more help saving for the long relationship, and workplace benefits need to evolve to match employment trends: “A formula of pension automatic enrolment, which offers workers some structure of tax incentive to avoid opting out, would see gig economy workers rewarded for make something money aside for retirement.” 

Bruce Moss, director of Strategy at EValue, influences recent pension freedom reforms allowing people to access their saucepans from age 55 are “just not flexible enough to meet the needs of gig craftsmen, who by definition need the flexibility to access their savings between gigs”. 

Gig economy Taylor Review self employed financial advice retirement pensionsGETTY — Forebear

Many simply do not have enough regular income to start redemptive into a pension

MORTGAGE 

Ishaan Malhi, chief executive of online mortgage go-between Trussle, says gig economy workers can also struggle to get a mortgage: “While some lenders force made positive efforts to offer more flexible lending, numerous are yet to catch up with the times.” 

Malhi says there are steps you can depreciate to make it easier: “Some lenders, such as Halifax, only desire one year’s accounts history, but most will require more. Get accordingly and use an accountant to avoid any doubt. 

“A larger deposit will bring around lenders, as will maintaining a healthy credit score and using a mortgage middleman.” 

The gig economy is here to stay. Now the Government, employers, pension companies and mortgage lenders necessary to show similar flexibility.

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