PensionBee, a leader in the UK retirement savings market, is calling for urgent reform to bring the self-employed into the pension saving system, after today’s interim report from the Pensions Commission found that just 4% of wholly self-employed workers are saving for retirement.
The Commission's report finds that of the approximately four million self-employed workers in the UK, only 17% save into a pension at all. For those with no other employed income, it falls to just 4%. Unlike employees, the self-employed have no access to Auto-enrolment (the system that automatically signs employees up to a workplace pension), no employer contributions and no inertia-based default to nudge them into saving.
The findings echo 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 - 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, commented: “One in 25 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. The solution is not complicated: 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.
“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."
What self-employed workers can do now
The system has let self-employed workers down - but that does not mean they have to wait for it to catch up.
- Open a personal pension. A personal pension or Self-Invested Personal Pension (SIPP) attracts the same government tax relief as a workplace pension. A basic rate taxpayer gets a 25% government top-up on every eligible contribution - a £100 contribution only costs £80.
- Use your Self-Assessment deadline. Every January, self-employed people already focus on their finances. Make it a habit to put a lump sum into your pension at the same time, and claim that year's tax relief before it lapses.
- Start small and be consistent. Variable income puts many self-employed people off saving altogether, but even modest regular contributions compound significantly over time. Even starting in your 30s rather than your 40s makes a bigger difference than most people realise.
- Check where you stand. PensionBee's Pension Calculator shows what your current trajectory looks like - and what a difference acting now could make.
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