Self-Employed Aren't Saving Enough

5 December 2015

Self-Employed Aren't Saving Enough For Retirement. The number of self-employed people in the UK has risen dramatically over the past few years, with Britain's biggest recession in living memory fuelling this increase. Working longer hours and earning less than other workers on average in the UK, the number of self-employed people is at its highest level in the country since records began nearly 40 years ago.

Figures indicate that 4.6 million people are now self-employed in the UK, with the most popular self-employed occupations being carpentry, construction and taxi driving. In 1975 just 8.75% were self-employed and now 15% of the total workforce are.

Although many people are enjoying the benefits of self-employment, recent figures have indicated that the growing numbers of self-employed are not preparing sufficiently for retirement. In 2001/2, one in three self-employed people were making personal pension contributions, however this has dropped dramatically in more recent years, with just one in ten self-employed people making pension contributions in 2013/14.

Those enjoying the flexibility of self-employment and who are not looking forward to their retirement and saving sufficiently risk a future of hardship. The significant drop in the numbers of self-employed saving towards their retirement comes in the wake of the government's auto enrolment scheme, which will see millions of workers automatically enrolled into an occupational pension scheme. The self-employed however seem to be re-investing any spare money into their own business and whilst this business could in effect be their 'pension' in retirement, it may not be sufficient to provide them with a comfortable standard of living.

It's an issue that has been noticed by the TUC, with Frances O'Grady, the TUC General Secretary stating that many people want to work for themselves. But the growth in self-employment is reducing people's pay, job security and retirement income – and is likely to be reducing the government's tax take, too.

Will we see a call for an auto enrolment type scheme for the self-employed? There doesn't seem to be anything on the horizon at the moment, but with a worrying lack of the self-employed saving for retirement, it could well be something for the government to consider.

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