Private pension participation among self-employed workers earning more than £10,000 has fallen from around 60 per cent in the late 1990s to 22 per cent by 2022, research from Guiide has revealed.

The report, How do people fund their retirement?, was produced by students from the University of Warwick and Monash University and sponsored by Guiide.

Rather than focusing solely on pension saving, the research collated evidence on the combination of state pension, workplace and personal pensions, savings, investments, housing wealth and continued employment used to fund later life.

It found that the balance between these sources varied significantly depending on income, employment status, gender and ethnicity, with the state pension acting as a near-universal foundation, while private wealth determined the level of financial flexibility available in retirement.

The findings were especially stark for the self-employed, with pension participation among those earning more than £10,000 falling from around 60 per cent in the late 1990s to 22 per cent in 2022, compared with around 80 per cent among employees.

The report also noted that only 24 per cent of self-employed adults were contributing to a pension in 2024, while 29 per cent had no private pension provision at all.

Among self-employed people aged 55 and over, around 30 per cent had no private pension savings, compared with approximately 14 per cent of employed counterparts.

However, the research argued that this did not necessarily mean self-employed workers had less overall wealth, describing the cohort as “asset-scattered rather than asset-poor”, with wealth more likely to be spread across property, business assets and financial savings rather than concentrated in pensions.

Guiide director, Philip Hodges, said: “What makes this work interesting isn't any one statistic in isolation. It's the picture unveiled when you bring the evidence together.

“People reach retirement in very different circumstances. Some have significant pension wealth, others have property, savings or business assets, while many expect to continue working. Yet much of retirement planning still starts with an individual pension pot.”

The report also identified a significant gender gap in retirement wealth, finding that women aged 55 to 59 held a median private pension wealth of £81,000 between 2020 and 2022, compared with £156,000 for men.

It suggested that lower levels of occupational pension wealth and continued employment income left women more reliant on the state pension and benefits, while longer average life expectancy could further widen the gap as private income sources were depleted.

Differences were also found across ethnic groups, with private pension participation at 83 per cent for Indian households and 82 per cent for White British households, compared with 48 per cent for Bangladeshi households and 59 per cent for Black African households.

Income was another major dividing line.

Among those in the middle-income range examined by the report, expected use of occupational pensions increased from 63 per cent at the lower end of the range to 77 per cent at the upper end, while use of savings and investments rose from 47 per cent to 80 per cent.

Meanwhile, the proportion holding at least £100,000 in unaccessed defined contribution (DC) savings ranged from 15.7 per cent among lower earners to 61 per cent among those earning more than £53,000.

Hodges warned that the findings reinforced the need for retirement guidance and advice to take account of an individual’s complete financial position rather than focusing solely on pension assets.

“The challenge for our industry is to make sure the support and advice people receive reflect the full scope of how they will fund their retirement,” he added.

Pensions Management Institute chief strategy officer, Helen Forrest Hall, who reviewed the research and wrote its foreword, stressed that the findings provided a reminder that there was “no single path to retirement”.

“People's retirement outcomes are shaped by a wide range of factors, including pensions, savings, housing wealth and employment opportunities throughout their working lives," she added.

“By bringing fresh perspectives to this important issue, the students have produced research that can help inform meaningful debate and support better decision-making across the pensions industry.”

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