Almost half (49 per cent) of self-employed people with a private pension changed their pension saving habits after leaving pay as you earn (PAYE) employment, according to Standard Life.

Standard Life’s report found that while nearly a fifth (18 per cent) of self-employed people increased how much they save into a pension after starting to work for themselves, a third (33 per cent) reduced, paused or stopped pension contributions.

The research added that the impact of a five-year pause in contributions in your 30s could reduce a pension pot by £25,000 by the age of 68.

However, the calculations showed that increasing contributions by £250 a month over the same period could add around £26,000.

The Pensions Commission’s recent interim report confirmed that 15 million people in the UK are currently under saving for retirement, with the self-employed identified as particularly at risk.

The report highlighted that just 4 per cent of those who relied solely on self-employment were saving into a pension.

Commenting on the research, Standard Life retirement savings director, Mike Ambery, said: “Life rarely follows a straight line – and pensions don’t either. Becoming self‑employed is a major life moment that often reshapes how people think about their finances, with contributions rising, falling or pausing as income becomes less predictable and the structure of a workplace pension falls away. The Pensions Commission’s interim report brings this challenge into sharp focus."

The research also found that Gen Z (56 per cent) and Millennials (52 per cent) were significantly more likely than Gen X (29 per cent) and Baby Boomers (16 per cent) to have reduced, paused or stopped pension contributions after going self-employed.

“For many younger workers, this shift happens earlier in their careers, at a point when saving habits are still being established,” Ambery said.

“That can make this a more fluid period, where pension contributions move in both directions. Positively, for some it can also be a trigger to take greater control and even increase what they put into their pension. Whatever the approach, the key is staying engaged and making conscious decisions about long‑term saving.”

Ambery added that with the government planning to phase out Lifetime ISAs for retirement saving, self-employed workers may need to rely more on pensions as a stable and tax-efficient way to save for the future.

“By taking a proactive approach early on – whether that’s setting up or reviewing a pension, maintaining contributions where possible, making the most of available tax reliefs, or keeping track of existing pots – self‑employed workers can stay in control and keep their retirement plans on track as their working lives change,” he said.

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