As auto enrolment begins for most of the employed people in the United Kingdom, new research from international financial services company, Prudential, has found that 46% of all self-employed people in the country, almost 1.5 million people in total, have no private pension provision.
This worrying lack of interest in pension investment from the self-employed was also reflected in the fact that 50% of those asked admitted that they intend to rely on the state pension, currently set at just £107.45 per week, as their sole source of income for the duration of their retirement.
Additionally, 20% of self-employed people have plans to sell their business as a means of funding their retirement and almost the same number admit they do not intend to retire at all.
Historically, pensions have been seen as a way for the self-employed to take money from their business, without the need to pay tax or national insurance contributions. However, these findings demonstate a worrying change of priorities.
Prudential’s findings also examined the reason for this lack of pension investment amongst small business owners and the self-employed. Of the 46% of people without private pension provision, more than half said that they simply could not afford to invest in their retirement.
Additionally, many said they were making provisions for retirement in other ways, such as by putting their money into an ISA, because they found pensions to be restrictive.
“It’s sometimes hard for self-employed workers to distinguish between their business and personal finances. Pensions offer huge tax advantages,” explained Stan Russell, a representative from Prudential.
However, Russell reiterated the importance for self-employed people to address their need to plan for the future.
“Business owners who have not made any retirement provision should seek advice from a financial adviser,” he said.