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Third of self-employed have less than £1,000 in savings, finds interactive investor

90% of self-employed workers aged 55 and over were off track for a moderately comfortable retirement.

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Third of self-employed have less than £1,000 in savings, finds interactive investor
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DIY investment platform interactive investor has launched a pensions report found that 31% of self-employed individuals have less than £1,000 in savings and 15% have no cash savings, while half have less than £10,000 saved.

The ‘Second-class retirement: The self-employed experience report’ surveyed 718 self-employed people via Opinium.

It found that 38% of respondents had no pension savings, rising to 50% among under-35s.

Almost two fifths (37%) of self-employed people were not paying into a pension.

90% of self-employed workers aged 55 and over were off track for a moderately comfortable retirement, with less than £250,000 saved in their pensions – six in 10 had less than £10,000 in pension wealth.

63% of self-employed women earned less than £30,000, compared to 38% of self-employed men; 43% of self-employed women had no pension at all, versus 35% of men.

More than a third (35%) of those above 55 planned to continue working beyond their 70th birthday; only 17% of over-55s intended to fully stop working when they retire.

Only 23% of self-employed workers got financial advice, and just 30% of business owners.

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Just one in 10 self-employed workers could answer three simple pension questions, with one in six over-55s getting all three answers correct.

interactive investor advocated for auto-enrolment for the self-employed in order to tackle the pension crisis, suggesting an ‘automatic opt-in’ model, activated through the self-assessment tax return.

Richard Wilson, CEO of interactive investor, said: “Our report makes it patently clear that many hardworking self-employed people are on course for a second-class retirement.

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“The self-employed are essential to our nation’s competitiveness yet they are at a disadvantage when it comes to saving for their future. This isn’t right and needs to change.

“Policymakers have failed to address the unique challenges faced in saving for retirement when you work for yourself.

“It’s high time policymakers paid greater attention to this often-overlooked segment of the workforce.

“There needs to be a concerted effort to integrate self-employed workers into the pension conversation, offering them a comprehensive level of support and resources in the same league as what’s available to salaried employees.

“Without such reforms, the chasm between the pension haves and have-nots will only widen, undermining the principles of fairness and financial security for all.”

Myron Jobson, senior personal finance analyst at interactive investor, said: “Our report lays bare that many self-employed people are sleepwalking their way into retirement difficulty and potential poverty.

“The fact that 38% of the sample said they have no pension savings at all, with 15% claiming to have no cash savings at all, underscores the perilous financial position many self-employed workers find themselves in.

“It is unfortunately yet another area in which the gender disparity is stark, with women on more unstable financial footing.

“Compounding these issues is a glaring lack of financial advice. Only 23% of the self-employed receive guidance from financial planners or advisers, likely contributing to poor pension planning and a lack of informed decision-making.

“It means that the prospect of working into old age is becoming a grim reality for many self-employed people – born out of financial desperation rather than choice.

“Self-employed people aren’t homogeneous; they represent a diverse and multifaceted group spanning countless professions and industries.

“From freelancers and small business owners to independent contractors, each self-employed individual faces unique challenges and circumstances, especially when it comes to saving for retirement.

“Understanding this diversity is crucial for addressing their distinct financial needs and ensuring they have the support necessary to secure their futures.”

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