The majority of the UK’s higher-earning entrepreneurs are failing to save into a pension, according to Fidelity International.
A Freedom of Information request by the investment management firm found three in five (61%) higher-rate and almost half (48%) of additional-rate self-employed taxpayers are not contributing to a pension.
In total, it means around 167,000 self-employed workers who pay higher- or additional-rate tax are not saving into pensions.
According to Fidelity’s calculations, more than a fifth (22%) of self-employed workers with over £500,000 in assets are not contributing to a pension.
By contrast, HMRC data shows 89% of eligible employees save into a pension, with higher earning employees more likely to contribute.
Despite this, Fidelity’s analysis shows that the self-employed are twice as likely as employees to own homes worth over £500,000, with 18% of self-employed people owning homes valued at more than half a million pounds, compared with 9% of employees. A quarter hold property worth at least £375,000 compared with just 16% of employees.
At the same time, almost a third (30%) of self-employed also hold more than £50,000 in savings and investments.
Marianna Hunt, personal finance specialist at Fidelity International, said: “Across the board, higher earners are some of the most at risk of under-saving for retirement and nowhere is this more apparent than among the self-employed.
“By not contributing to a pension, they are not only putting their long-term financial security at risk but also missing out on valuable tax relief.
“These numbers show that for many entrepreneurs, it’s not a lack of income or wealth that stops them from saving into a pension. We urgently need to look at the other barriers or beliefs holding them back so we can avoid a generation of self-employed workers having to face a second-class retirement.
“Without auto-enrolment and with incomes that can fluctuate, saving can feel harder but small, consistent steps can make a meaningful difference. Building formal pension savings adds a vital layer of protection that supports the independence entrepreneurs value.”
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