Self-employed men more likely to save but gender gap narrowing - DWP

Self-employed men are more likely to be saving than self-employed women, with an approximate seven percentage point difference in their propensity to save.

The research from the Department for Work and Pensions (DWP) also revealed that active pension participation rates amongst self-employed women have been consistently lower than men since 2006.

However, the gap has narrowed since 2010, with the study noting that if the definition of participation was extended to include retained pensions, the gap would be narrower still, bringing women’s participation rates in 2014-16 in line with that of men.

Furthermore, whilst participation of self-employed workers has fallen to 15 per cent in 2017/18, men’s participation rates have decreased more than women’s since 2006, on both definitions.

Included within the final automatic enrolment review, the DWP has also published findings from it's econometric analysis, estimating the probability of a self-employed individual saving into a pension scheme dependent on 'micro' factors, such as age and gender.

The analysis stipulated that whilst income was significant, it was “less significant than might be expected”, with a £10,000 increase in net financial wealth lading to an average increase in the probability of pension saving of just 0.11 percentage points.

However, self-employed men, and those on a higher income, were found to be the most likely self-employed workers to save into a pension nonetheless.

While there was a positive relationship between age and the probability of saving into a pension, the analysis also suggested that this could fall with age.

Those who are self-employed with more than one job were 14 percentage points more likely to save into a pension scheme, however DWP noted that this may be due to those individuals may be employees in their secondary job.

In addition, those renting were 14 percentage points less likely to save into a pension, with urban residents also less likely to contribute (six percentage points).

This follows recent research from Tisa, which revealed that lifelong renters were likely to exhaust their pension savings 12 years before homeowners.

Furthermore, those who own their business and had planned to sell it to fund their retirement were nearly 11 percentage points more likely to save into a pension than those who either did not own their business, or had no plans to sell it for retirement income.

Migrants were also on average nine percentage points less likely to save into a pension, though the DWP noted that “it was not clear whether migrants were planning to retire in the UK or whether working in the UK is a temporary measure”.

Commenting on the full report, Royal London pension specialist, Helen Morrissey, said: “Encouraging the self-employed into pensions remains a tough nut to crack and we need innovative thinking on how we can boost engagement among this group.”

The review has also revealed preliminary results for messaging trials, ongoing at the time of publication, which were informed by Nest Insight’s research and tested in two randomised controlled email trials.

Four different email messages were tested to understand their impact on encouraging long-term saving, including palatable contributions, pension flexibility, tax benefits, and loss framing.

The ‘open’ rates for the emails were similar across both trials and “relatively high”, with at least a 40 per cent open rate across all trials.

However, the results revealed no significant differences between the click through rates for any of these messages after they were opened.

The DWP have confirmed that further analysis of the messaging trials will be conducted, with a full report expected to be published by Nest later this year.

These findings are expected to inform the next stage of trials, with plans for “technology-based trials testing tools and solutions”.

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