Industry experts have warned that despite an increase in the number of self-employed people making pension contributions, this remains a "drop in the ocean" compared with the level of savings needed.

Figures released by HMRC today (31 July) revealed that £2.7bn of individual contributions were made by self-employed members in 2023 to 2024, up from £2.3bn in 2022 to 2023.

In addition to this, it found that the number of self-employed individuals making individual contributions to a personal pension has increased to 360,000 in 2023 to 2024 from 350,000 in 2022 to 2023.

This stood in contrast with the broader population, as HMRC found that the number of members making individual contributions to a personal pension decreased to 6.81 million in 2023 to 2024 from 6.85 million in 2022 to 2023.

However, income tax relief on self-employed contributions remained the smallest type of Income Tax relief at £1bn.

And despite the increase, calls for better retirement support for self-employed people have continued.

St James Place head of advice, Claire Trott, said: “With the self-employed not having access to a workplace pension scheme and often faced with the challenges of balancing the needs of growing their business with investing for their future, it is encouraging to see the uptick in both the number of this group contributing to their pensions, and the overall contributions made.

"That said, there is still progress to be made to encourage more of this group to put money aside for their retirements.

"Ultimately, people will only continue to contribute to their pensions if they continue to trust the pensions system.

"Constant speculation and changes to pension tax rules are damaging and can impact savers’ views of pensions as long-term, stable savings vehicle."

Adding to this, Hargreaves Lansdown head of retirement analysis, Helen Morrissey, argued that "while the number of self-employed people making pension contributions has risen, it remains a drop in the ocean".

"This may also be due to the fact that this group chooses other methods of saving for retirement, such as property or ISAs," she clarified, however.

"We have championed the use of the Lifetime ISA, particularly for basic rate taxpayers within this group, with the 25 per cent government bonus acting like basic rate tax relief on a pension with the ability to access your money if needed.

"The current exit penalty of 25 per cent for early access does act as a deterrent though and we have called on government to reduce it to 20per cent."

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