Over half of contractors save in to a personal pension as large businesses fear losing out on their talent due to IR35

It has come to light that just over half of contractors and freelancers are now saving in to a personal pension scheme as over half of medium and large businesses are concerned they will miss out on skilled contractors due to IR35.

SJD Accountancy has found out that 50.2 per cent of contractors and freelancers are now saving in to a personal pension scheme, which is a year-on-year increase of 14 per cent.

However, they are still far behind private sector workers as 81 per cent of these employees are now paying in to a pension plan, mainly due to auto-enrollment.

As well as 49.8 per cent of contractors choosing not to save in to a personal pension scheme.

At the same time Robert Half, a specialised recruitment consulting agency found that 62 per cent of medium to large private sector businesses are worried that IR35 will cause them to lose out on contractor talent.

Also under half (42 per cent) of medium to large companies are concerned about losing current temporary workers to the new IR35 rules if they cannot renegotiate employment contracts in time.

James Foster, senior commercial manager at SJD Accountancy, said:

Although this year’s study suggests that slightly more contractors and freelancers are using personal pension schemes than in 2018 – which of course is welcome news – there are still a significant number of workers that aren’t choosing to take advantage of the pensions tax relief to save for later life.

There remains a huge gap between self-employed workers and employees, with little in the way of legislative change to try and readdress the balance. When you combine this with some of the upcoming changes to the contracting industry through IR35 changes in the private sector, it’s clear that more needs to be done.

Being self-employed offers people so much freedom with their working life and provides vital skills to UK businesses. But it’s important we understand some of the challenges facing these workers if we are to protect the long-term future of the sector and help safeguard our economy.

Matt Weston, managing director, Robert Half UK said:

Business leaders are concerned about the impending IR35 rules and its potential impact on the UK’s temporary talent pool, particularly as firms look for a blend of high performing temporary and permanent employees to pursue growth strategies in 2020.

SJD Accountancy obtained these results by conducting a survey of 1,800 contractors and freelancers.