Those people who haven’t had to auto-enrol themselves may be ill-prepared for retirement
While auto-enrolment has ensured a pension for UK employees of all companies, regardless of size, if you are self-employed you may well be missing out.
Legally, self-employed workers do not have to enrol themselves into a pension – and the result is that many will not be making contributions into a retirement pot, as well as missing out on the employer and government contributions.
Indeed according to a new study from Aegon about saving habits of the self-employed, only 15% of such workers in the UK are ‘very optimistic’ about having enough money in retirement.
Worryingly for the 4.6 million self-employed people in the UK, a majority (75%) don’t save regularly for retirement, even though half are optimistic that they will be able to choose when they retire.
For over half (53%) of survey respondents, retirement was projected to be after the age of 65 – however for many the reasoning for this was positive: for example, because they enjoyed their career, rather than being compelled to keep working.
There’s a growing concern that this group are increasingly likely to struggle with inadequate retirement income
Kate Smith, head of pensions at Aegon, comments on the research: “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.”