Some 43% of Britain’s 4.6 million self-employed workers have no pension savings and say they cannot afford to put money away for their retirements, according to new research from Prudential.
Prudential’s research found that self-employed people – who focus primarily on developing their businesses – often have little spare cash left for investing in retirement plans. Just 17% of self-employed people regularly contribute to a pension while another 6% make contributions ‘when they can’.
The main barrier cited by those self-employed workers not contributing into a pension is affordability. 57% of those polled said that that they have other financial priorities or simply cannot afford it, with a further 16% having either turned their backs on saving into pensions, or planning to rely on their businesses to fund their retirements. 6% say that they will never stop working. And 9% say they’d rather reinvest any spare money back into their businesses rather than into a pension.
Worryingly, the research shows very little appetite for saving in the future among the self-employed, with 52% admitting to having no plans to start saving into a private pension, or resume pension payments. Only 27% will start saving at some point, or restart saving, with 20% remaining undecided.
The research reveals a generation gap when it comes to self-employed peoples’ attitudes to pensions – potentially reflecting a surge in older workers who have become self-employed after leaving previous jobs. 69% of self-employed workers aged between 18 and 34 have no pension savings, compared with 32% of those over the age of 55. Around 46% of self-employed workers over the age of 55 have pension savings which they no longer contribute to.
“Focusing on day-to-day finances is second-nature for those who are self-employed”, said Stan Russell, retirement income expert at Prudential. “However, not considering or planning for the longer-term is a risky approach, especially if those who own their own businesses don’t want to end up having to work past their ideal retirement age.”
The research shows that the overwhelming majority (8%) of self-employed people who do make regular contributions have personal pensions, while 16% have company pensions and 17% have SIPPs.
|REGION||PERCENTAGE OF SELF-EMPLOYED PEOPLE WITH NO PENSION SAVINGS|
|Yorkshire & The Humber||49%|
* Northern Ireland and Wales sample sizes too small to include