FUTURES MARKET
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• Owner-drivers, struggling to make ends meet in the current depression, are more concerned about coping with the present than worrying about the future.
Retirement seems a long way off when you are juggling your finances to pay the Inland Revenue, meet the mortgage repayments, pay the instalments on the truck, and buy fuel. But unless provision is made while you are young, retirement will arrive and with it a dramatic drop in your standard of living.
The sensible option, the experts point out, is to take out a personal pension. But Mick Binns, general secretary of the National Owner Drivers' Association, says: "Pensions are not very high on the list of priorities for an owner-driver."
Binns pessimistically believes that probably fewer than 50% of owner-drivers have made any provision for a pension. "Because their income is not fixed and depends on what work is available, many owner-drivers are loath to make that sort of financial commitment," he says. He believes the state pension at age 65 will not be worth very much to any owner-driver who has enjoyed a decent standard of living.
TOUGH GOING
Stephen Quinn, a consultant with Affiliated Financial Services, which works closely with Owner Operators UK, has found selling pensions to lorry drivers tough going.
"Many are on such a shoestring budget at present they can scarcely afford their compulsory insurances," he says. "Some are even driving around while underinsured. The last thing they are thinking of is their personal pension."
It is important to plan for retirement. "It makes sense to put as much as you can afford as often as possible into a pension scheme," says Binns. "This way you can also maximise your tax relief."
Richard Freemantle, a consultant with the Freight Transport Association's pension adviser GMBC, points out that very few people — not just owner-drivers — really think about their pension until they hit 50.
There are no special deals for ownerdrivers — they are treated the same as any other self-employed occupation — but they need to get sound financial advice. "Any proper financial adviser will give due allowance to the fact that the ownerdriver's income is variable and would not encourage the commitment of a regular large sum of money," he says "because if you have to cut back on premiums, or stop paying them altogether, there is a significant financial penalty.
But, he adds, it is possible for owner-drivers to pay their pension contribution yearly in arrears.
An adviser with a large life assurance company also points out that there are lots of advantages in having a personal pension plan as a long-term savings mechanism. "Pension funds grow free of all UK taxes," he says. 'This is better than a building society account."
Binns reckons he has spent the past 12 years trying to encourage drivers to make some provision for their old age. Those who do decide to start a scheme usually have no problem finding a company who will deal with them
But many view retirement almost as if it were not going to happen to them, he says. "A lot feel the same way about the prospect of losing their licence since the introduction of compulsory medicals at age 45," he points out. "We spent two years researching the market before negotiating a loss of licence insurance policy which allows our members to insure their licence for £25,000, Yet only about 80 out of 800 members have taken it up."
During the past couple of years with the building industry in particular being decimated by the recession, pension premiums have been put firmly at the bottom of the long list of priorities. However, things were not much better even in the boom years.
"We were forever sending out literature to encourage owner-drivers to take out pensions but getting very little interest back," he recalls. Binns would like to see some of the big companies which depend heavily on owner-drivers help with the personal pension push.
ENCOURAGE
"Some of the big firms are already involved in some sort of pension arrangements with their own employees," he says. "They could do more to encourage owner-drivers to make a pension provision, perhaps by building it into the haulage rate." He thinks companies neglect this side of owner-drivers' welfare. "I believe they have a moral responsibility to encourage drivers to be much more aware of the importance of saving for a pension," he insists.
But Mark McVicar, an analyst with County NatWest, does not think this should be the case. "It is down to the owner-driver to organise his own pension," he argues. "Why should the company do this when, presumably, the owner-driver is already charging them the commercial rate which should cover all his costs, including a pension?"
Owner-drivers are not a special case, McVicar says. "They are simply sub-contractors, like any other. For companies to take on their pension arrangements 'would be like Tesco saying to NFC or Tibbett and Britten, we want you to do our contract distribution but we will pay your employees' pension contributions for them'."
A company cannot buy a pension plan any more cheaply than an individual can. "And besides," he adds, "the whole movement inside the pensions industry has been to free people to choose to do what they want to do."
A spokesman for Tarmac Roadstone, which uses many owner-drivers, says the company has always encouraged its owner-drivers to make provision for pensions. "We continue to arrange for expert advice to be available individually to new owner-drivers, including opportunities for consultation with pension specialists," he says.
But Bill Warbey, who runs the FTA's insurance services on behalf of Bain Clarkson, believes owner-drivers have to face up to the responsibility of organising their own future needs.
"We endeavour to bring the pensions question to every self-employed ownerdriver's attention," says Warbey. "But, at the end of the day, you can only lead a horse to water."
LI by Barbara Millar