A growing number of farmers are looking ahead and saving for later life

According to new figures from the Office of National Statistics, shared by leading rural insurer NFU Mutual, the proportion of employees with workplace pensions in agriculture has rocketed from 16.6 per cent in 2012 to 64.3 per cent in 2021.

Across the UK, the proportion of employees with workplace pensions has risen from 47 per cent to 79 per cent in the same time.

This increase follows the introduction of automatic enrolment in 2012, which made it a legal requirement for all employers, including farmers, to offer a pension to eligible employees.

Separate NFU Mutual figures show the number of all farmers saving into pensions has also increased in recent years - rising from 66 per cent in 2019 to 74 per cent in 2021.

This suggests a growing proportion of farmers and farm workers are saving for later life, whether through a workplace pension or a private pension.

Sean McCann, chartered financial planner at NFU Mutual, commented: “Farming is a way of life, and many farmers choose to never fully retire in the traditional sense.

“But, having an independent source of income in later life gives you the option to take less from the business, making it easier to hand over the reins to the next generation.

“Defra’s new lump sum exit scheme may spark some farmers to think about their retirement plans, particularly the many options available for taking money from their pension.

“It’s good news that more farmers and farm workers are investing into pensions because there are some significant tax benefits.”

Sean continued: “For employees, pensions can provide choice in later years.

“Many phase their retirement over time, reducing the hours they spend at work using their pension to supplement their income.

“Currently, pensions can be accessed from age 55, increasing to 57 from 2028.”

For every £80 you put into a pension, the government adds an extra £20.

If you’re a higher rate taxpayer, you can claim up to another £20 from HMRC.

Any growth within your fund is largely tax free. Up to 25 per cent of the value of your fund can be taken as a tax free lump sum from age 55.

Importantly, any money left in your fund on your death is normally free of inheritance tax.