UK self-employed turn away from personal pensions

UK self-employed turn away from personal pensions

With the self-employed sector continuing to grow in the UK, new research shows that millions are risking their retirement by ignoring their pensions.

According to a new analysis from insurance specialist Prudential, the number of self-employed workers who contribute to personal pension pots is at its lowest since 2001.

4.6 million self-employed

The report is based on data from HM Revenue and Customs and the Office for National Statistics, which reveals that less than 9% of the self-employed make personal pension payments.

This stands in stark contrast to the numbers of people that registered as self-employed with HMRC during the 2013-14 tax year, which hit a record of 4.6 million.

However, of these only 420,000 of them paid into a personal pension during that time frame.

Fundamental shift

A retirement income expert at Prudential, Vince Smith-Hughes, said: “Many of those who now enjoy the flexibility of self-employment are risking an inflexible future in retirement. There has been a fundamental shift in the way people work in recent years, with the number of self-employed workers increasing by nearly 40 percent since 2001. But the step away from the security of salaried work also sees many workers giving up the benefits of company pension schemes and employer contributions."

Auto-enrolment into company pension schemes for those on PAYE has helped highlight the problem, and the practise of re-investing spare cash into a business can often seem a greater priority than looking after retirement years.

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