Increased numbers of self-employed women could lead to the widening of the retirement income gender gap as they are less likely to save into a pension, Prudential has found

The total number of women that are self-employed has increased by 22 per cent in the past four years to over 1.5 million, UK employment figures between April and June 2016 show. This is double the rate of growth for male self-employment over the same period.

Just 12 per cent of these women contribute to a personal pension in comparison to 59 per cent of employed women who pay into occupational schemes. Men are slightly better with 17 per cent of those who are self-employed saving for a pension and 60 per cent of those who are employed contributing to their workplace scheme.

While the retirement income gap since 2008 has been closing, women retiring in 2016 still expect an income, on average, £5,400 a year less than their male counterparts.

Prudential suggested that slightly lower pension scheme contribution rates between the sexes could be due to the fact that, on the whole, women earn less than their male peers.

Prudential retirement income expert Kirsty Anderson said: “There is a risk that the increase in self-employed women will undo some of the progress in shrinking the retirement income gender gap that we have seen in recent years. When becoming self-employed, pension contributions can easily slip down the priority list.

“While auto-enrolment is encouraging increasing numbers of employees of companies to save into a pension, those choosing the flexibility that many self-employed people enjoy, are giving up benefits such as employer contributions into company pension schemes.

“Pension saving is for the long term and the earlier anyone starts saving, the longer their retirement fund has to grow. For most people, and especially those who are self-employed, a consultation with a professional financial adviser will help them to put a plan in place to save regularly for as comfortable a retirement as possible,” Anderson added.

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