The market in contractor finances has become far more intricate than many in the UK’s contracting community appreciate, with the result that significant numbers may not be making adequate provision for pensions according to an expert.
Phil Perry, who is co-director and co-founder of Ark Financial Planning, has warned that a majority of people simply do not understand investments or pensions, a deficit which could well result in many professionals facing significant financial difficulties in the future. Unless, that is, they seek expert advice.
Mr Perry is urging people to think very carefully about ensuring that they have adequate financial “fundamentals” in place – the policies and products which truly afford protection against hardship in retirement. Without them, long-term retirement planning will simply evaporate into thin air. Once that disappears, the temptation will frequently become overwhelming to dip in to other savings in order to maintain the family lifestyle. These funds, too, will then dissipate, leading to potentially dire financial circumstances post-retirement.
According to a study commissioned by the friendly society, Oddfollows – revealingly entitled “Mind the Gap: the Pensions Funding and Knowledge Crisis” – substantial numbers of 55-65 year olds are at risk of poverty due chiefly to a lack of knowledge about pensions. The assumption appears to be that simply by earning a gross annual income of £25,000 they will automatically enjoy a good standard of living, whereas in truth the latter is dependent on making the right investments and pension options during one’s working life.
