Four million self-employed people in the UK and millions more working through gig platforms or with multiple part-time jobs are losing out on thousands of pounds in retirement savings, says PensionBee.
According to new research from the digital pension provider, a worker earning £25,000 who spends 30 years outside the pension system built for employees stands to lose around £70,000 in retirement savings.
The research found that more than half (57%) of gig and temporary economy workers say they are unable to afford pension contributions, and 74% of self-employed people without a pension do not know their pension contributions would qualify for tax relief.
The findings echo the government’s own Pensions Commission’s interim report, which found that just one in 25 wholly self-employed workers are actively saving for retirement.
PensionBee said two thirds (66%) of UK adults already back extending automatic pension enrolment to the self-employed through the tax return system, rising to 78% among 25-34 year olds.
Lisa Picardo, chief business officer UK at PensionBee, said: “The barrier sits in the structural disadvantage, not with the person. None of this reflects a lack of willingness to save, or a lack of desire for a good retirement outcome.
“Every survey in this report finds the opposite: self-employed workers engage with pensions at higher rates than most people assume, and the public, across every income band and age group, backs reform. But self-employed workers still are not saving enough. This is a structural problem, and a structural fix is needed.”
The report calls for four reforms: extending auto-enrolment eligibility to the self-employed and fixing the earnings threshold that currently excludes people working multiple part-time jobs; embedding pension prompts into the self assessment tax return; building guidance around life events such as maternity leave and career break that widen the pension gap; and making pension transfers more efficient.
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