What is the difference in the long run (when you compare at retirement) between a Contractor and a Permanent employee, assuming someone choses to work in one for their whole life? Will the pension be the same? Are all other entitlements the same?

EDIT: forgot to mention, this question is about UK (London)

  • Country is here extremally important. In Germany you have to pay full-height social taxes, therefore becoming same pension as employee. In Poland, you pay a lump sum for social being contractor, which entitles you to a very low pension only. – Danubian Sailor Mar 14 '14 at 11:13

Contractor -> No entitlements except the contract rate you are paid, or overtime if any. You will get NOTHING else or paid any extras. You will be kicked out the moment they don't need you and then you have to start a job search again.

Permanent -> Pension, leaves and all that a normal permanent employee gets. All the entitlements will be mentioned in your offer letter.

So what will happen long term is open to question, depending on your circumstances. That is an open ended question and there will be multiple interpretations of it.

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    So even though in UK you pay a considerable amount in taxes as a Contractor, you still don't get any pension at all? – richardIG Apr 23 '13 at 13:27
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    @richardIG: You'll be entitled to a state pension; but you'll only get a private pension if you pay into it yourself (whereas many employers will make provide pension contributions for their employees). – Steve Melnikoff Apr 23 '13 at 13:58
  • (regular) Taxes are completely irrelevant when it goes to pension. Pension is calculated only on the basis of social security fees (de-facto taxes), which are very high if you are an employee, but could be very low or non-existant if you're a contractor (depending on local law) – Danubian Sailor Mar 14 '14 at 11:11

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