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Self-employed risk pensions crisis

2 September 2018

A pensions crisis could be looming for self-employed workers, with a large percentage not saving into a pension, new research from Prudential has warned.

Its nationwide study found more than two fifths (43%) of those working for themselves admit they do not have a pension, compared to just 4% of those in employment – a key reason is that 36% of self-employed people say they cannot afford to save for retirement.

Nearly a third (31%) said they expect to rely solely on the state pension worth around £8,545 a year to fund their retirement, while 28% will be reliant upon their business to provide the income they need.

Self-employed workers now make up 15.1% of the UK workforce, with more than 4.8 million people working for themselves. The research showed that while they save, the focus is upon day-to-day emergencies rather than retirement.

Meanwhile, just one in 10 self-employed people see an adviser regularly, despite having potentially more complex requirements than those in employment, yet 19% are not confident with financial matters, while a quarter (24%) worry they do not know enough about money.

Kirsty Anderson, retirement income expert, Prudential, said: “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. 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.”

Professional Paraplanner