Large numbers of self-employed people 'facing poverty when they retire'
Published 17/12/2015 | 02:30
The pension position of the self-employed is worse than those in employment.
Findings from a survey by the Irish Brokers Association show most self-employed people have some pension benefits, but they are largely inadequate compared with their pre-retirement earnings.
Of those that have a pension, 41pc are still contributing to the fund, but more than one in five (22pc) are relying on preserved pension benefits from when they were employees.
Almost two-thirds (around 63pc) have a pension benefit, but the rest are set to be solely reliant on State funding in retirement.
This has prompted the Irish Brokers' Association to issue a warning to the Government that unless something is done to provide the self-employed with the same level of pension protection as is afforded to PAYE employees, then this demographic is likely to experience poverty in retirement.
Ciaran Phelan, chief executive of the Irish Brokers Association, said: "Six in 10 respondents in our survey have paid into, or are currently paying into, a contributory pension fund.
"But 22pc of those have stopped, and a further 37pc say they have nothing at all in terms of a retirement fund and are solely reliant on the State pension.
"We estimate that at least 59pc have not properly provided for retirement and an even greater percentage most likely don't have adequate provision in place," Mr Phelan said.
He added that, in contrast, 90pc to 100pc of State employees, and those in large traditional companies, have proper pensions.
"This is a wake-up call. There is a pension crisis looming and none will be hit harder than the self-employed".
The Irish Brokers' Association says that within the self-employed group there are some who are more adversely affected than others.
"Unfortunately, our survey revealed that higher earners are far more likely to have a pension. Only 36pc of those who earn less than €50,000 have a contributory pension compared with 54pc of those who earn over €50,000."
However, the likelihood of a self-employed person having a pension improves the longer they've been running their own business.
More than a third of those who have been self-employed for less than five years have a contributory pension compared with almost half of those who have been self-employed for over 10 years.
Other findings from the Irish Brokers' Association survey include the fact that one in five of the self-employed expect that they will not be able to retire until at they are at least 71.
Another 20pc believe they will be over 71 when they retire.
The average age the self-employed person thinks they will retire is 68, three years later than the full retirement age at 65 years, and six years later than their ideal retirement age of 62 years.