Self-employed pension saving levels fall to new low

Self-employed pension saving levels hit record lows in 2019/20, figures from HMRC have shown, with self-employed workers contributing £830m to pensions during the year, compared to £1.15bn in 2018/19.

The figures revealed that whilst total individual contributions had increased year-on-year, rising from £9.7bn in 2018/19 to £10.5bn in 2019/20, self-employed workers had bucked this trend, recording a continued decline in total contributions since a peak of £1.97bn in 2015/16.

Self-employed workers also missed out on the £20.8bn worth of employer contributions made in 2019/20, up from £18.2bn in 2018/19.

AJ Bell head of retirement policy, Tom Selby, said that given the number of self-employed workers had been spiking over the past two decades, the fact the amount being saved in pensions had fallen “dramatically” among this subset is “both counter-intuitive and extremely worrying”.

The firm noted that the figures do not capture the impact of the pandemic and lockdowns, suggesting that this will "almost certainly" have pushed self-employed saving levels even lower.

Selby commented: “While automatic enrolment has been successful in boosting pension saving among employed workers, it does precisely nothing for the self-employed.

“The government has previously promised to extend the principles of auto-enrolment to the self-employed, but so far we have seen little by way of progress.

“Without a nudge into a pension scheme and a matched contribution, it is hard to see how policymakers can dramatically move the dial on self-employed retirement saving.

“People are always looking for the next big pensions crisis – this could be it. If the government doesn’t step up and do something to boost savings levels among the self-employed, there risks being millions of people facing retirement disaster in the not-too-distant future.

“At the very least a communications drive to emphasise the importance of retirement saving among the self-employed – and the dangers of doing nothing - is urgently needed.”

    Share Story:

Recent Stories

DB risks
Laura Blows discusses DB risks with Aon UK head of retirement policy, Matthew Arends, and Aon UK head of investment, Maria Johannessen, in Pensions Age's latest video interview

Sustainable equity investing in emerging markets
In these highlights of the latest Pensions Age video interview, Laura Blows speaks to Premier Miton Investors fund managers, Fiona Manning and Will Scholes, about sustainable investing in equities within emerging markets

High-yield Investing
Laura Blows discusses short duration global high-yield strategies with Royal London Asset Management head of global credit, Azhar Hussain, in the latest Pensions Age podcast
Sustainable Investing
Laura Blows speaks to Royal London Asset Management sustainable fund manager, George Crowdy, about global sustainable equity investing