UK workers have been issued a £64,000 pension pot warning as experts scramble to save people thousands. PensionBee has found that the self-employed are failing to save a suitable amount of cash into their pension pot and that just 17% of those registered as self-employed are saving for retirement.
The Commission’s report went on to outline that savings for those with no other employed income had dropped to just 4%. The findings line up with PensionBee’s Invisible Worker campaign, which found that a self-employed person earning £30,000 a year is projected to retire with £64,000 less in savings than an employed peer earning the same wage.
It marks a 26% gap in retirement wealth, driven almost entirely by the absence of employer contributions through Auto-enrolment.
Lisa Picardo, chief business officer at PensionBee, said: “One in 25 [fully/solely] self-employed workers saving for retirement represents a structural failure of the system. These are people who work hard, pay taxes and deserve a retirement just as much as anyone else.
“Auto-Enrolment was a genuine step forward, but it was built for traditional employment and does not reflect how people work today. The self-employed were left out from the start, and successive governments have been slow to fix it.”
She added that the solution “is not complicated”. She said: “Use the existing Self-Assessment tax return process, which most self-employed already file, as the mechanism to nudge or default them into pension saving, the same way employees are defaulted through payroll.”
Picardo continued: “The Commission has done its job in naming this as a priority. The Government must now commit to a clear timetable for extending pension coverage to the UK’s millions of self-employed workers and not hide behind the 2027 final report as a reason to delay urgently needed change.
“Every year without action is another year of missed contributions for the people this report is most concerned about.”
PensionBee urged self-employed workers to take action, with a handful of options available to them immediately.
For example, opening a personal pension or Self-Invested Personal Pension (SIPP), putting a lump sum away in time for the Self-Assessment deadline, and building consistency over time.