Only 15% are very optimistic about having enough money in retirement
Overwhelming majority, 75%, don’t regularly save for retirement
But 50% are optimistic about being able to choose when they retire
Making sufficient pension provision is a looming issue for the UK’s 4.6 million self-employed*. When it comes to planning, the UK is lagging behind with 75% of the self-employed not regularly saving for retirement, placing them second bottom out of 15 countries surveyed. With low levels of saving, understandably, only 15% of people are very optimistic about having money to live on in retirement.
However, the self-employed enjoy greater freedom than workers with regard to their future retirement. So when it comes to the choice of when to give up work, half of those surveyed were optimistic about the timing of their retirement. Although 53% said they’d still be working after age 65, they cited positive reasons for doing so, like keeping their brain active or because they enjoyed their career. Only one in ten (9%) expected they would never retire.
The introduction of auto-enrolment was designed to get the nation saving. However, the pension reforms not only neglect the self-employed, they come with a further sting in the tail. As well as missing out on valuable employer and Government contributions, those self-employed business owners who employ staff have to pay for their employees’ pension contributions.
Kate Smith, head of pensions at Aegon, comments: “Against a backdrop of rapidly increasing numbers of self-employed in the UK, there’s a growing concern that this group are increasingly likely to struggle with inadequate retirement income when they eventually give up working.
“The self-employed face unique challenges when it comes to saving for retirement. As well as missing out on a lifetime of employer contributions, a variable income means many don’t have certainty of how much they’ll earn from one month to the next, making saving difficult.
“Preparing for retirement requires a long-term do-it-yourself approach which is currently being overlooked by too many of the self-employed.”
*ONS Trends in self-employment in the UK: 2001 to 2015
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