Looming pensions saving crisis on the horizon

THE number of people running their own businesses has soared since the financial crisis, with a significant number being set up by someone aged over 50.

But an unhealthy number of selfemployed workers in the UK do not currently save into a pension.

New research has highlighted that self-employed workers are heading towards a pension saving crisis as they cannot afford to save for their retirement. Starting your own business and becoming self-employed is exciting. But being your own boss can have some challenges – saving for retirement is certainly one of them.

The nationwide study found that more than two-fifths of those working for themselves admit they do not have a pension, compared to just four per cent of those in employment. A key reason is that 36 per cent of the selfemployed say they cannot afford to save for retirement.

Self-employed workers now make up 15.1 per cent of the UK workforce, with more than 4.8 million people working for themselves, but the research found they are heading for a less comfortable retirement, with many not planning to stop work.

Around one in three say they will be relying entirely on the State Pension worth around £8,545 a year to fund their retirement, while 28 per cent will be reliant on their business to provide the income they need.

Self-employed workers are savers, but the research found they are more focused on day-to-day emergencies than the long term of retirement. Two thirds (64 per cent) of the selfemployed save to build up a safety net in case of an emergency, in comparison with 57 per cent of those in employment.

Just one in 10 self-employed people see a financial adviser regularly, despite having potentially more complex requirements than someone in employment.

One in five are not confident with money and financial matters, while a quarter worry that they do not know enough about money.

All this adds up to an education gap when it comes to the importance of pensions for the self-employed, as 20 per cent admit they do not take pension saving seriously as they do not think it applies to them.

Saving for retirement is tougher when you are self-employed, as there is no one to organise a pension for you.

On top of that, self-employed workers often don’t have a regular income, so many will focus on setting aside money as a safety net if they cannot work. Oliver Mellor Dip PFS, BA (Hons)

Information based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change. Tax treatment is based on circumstances and may be subject to change in the future.

Although endeavours have been made to provide accurate and timely information, we cannot guarantee that such information is accurate as of the date it is received or that it will continue.

No individual or company should act upon such information without receiving appropriate professional advice after a thorough review of their particular situation.

We cannot accept responsibility for any loss as a result of acts or omissions.