Millions of self-employed workers are facing a pension crisis as they cannot afford to save for their retirement, new research has found.
Almost half (43 per cent) of self-employed workers do not have any pension savings, while more than one third (36 per cent) say they can’t afford to save for their retirement. A further 31 per cent said that they expect to rely entirely on the state pension to fund their retirement.
According to a new study by Prudential, one fifth (20 per cent) of the self-employed admit that they do not take pension saving seriously, as they don’t think it will apply to them. Just over a quarter (28 per cent) believe that they will be reliant on their business to provide the retirement income that they need.
However, Prudential has warned that without proper pension planning, millions of self-employed workers will be unable to afford a good quality of life in their retirement.
“Saving for retirement is tougher when you are self-employed as there is no one to organise a pension for you and no employer making contributions on your behalf,” said Kirsty Anderson, retirement income expert at Prudential.
“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.
“Saving for a pension is still important as no one wants to work forever and no matter what your employment status, having money to fund your retirement is essential as the state pension is unlikely to be enough to fund a comfortable retirement.”
The state pension is worth approximately £8,545 per year. Most economists believe that the average retiree will need at least £18,000 per year to live comfortably in retirement.
According to government statistics, self-employed workers now make up 15.1 per cent of the UK workforce with more than 4.8m people working for themselves.
Prudential’s research found that self-employed workers do save, but they are more focused on day-to-day emergencies than the long-term of retirement. Two thirds (64 per cent) save to build up a safety net in case of an emergency.
Meanwhile, one quarter (24 per cent) of self-employed people worry that they don’t know enough about money, while just one in ten see a financial adviser regularly, despite the potential complexity of their financial requirements.
Also published on Medium.Last updated: September 21st, 2018