Almost half of self-employed will struggle to live in retirement
Almost half of self-employed people will struggle to afford the basics in retirement, worrying research has found.
New data from Scottish Widows has revealed that 48% of self-employed people in the UK will struggle to afford the basics in retirement.
This makes them far more likely than the 18% of employees to face this issue.
The pension provider is now calling for the government to provide statutory intervention akin to auto-enrolment to help self-employed people save adequately for retirement.
The data was published today (Friday) in Scottish Widows’ 2023 Retirement Report, which includes a new National Retirement Forecast (NRF) that highlights the challenges people face in saving for retirement.
Pete Glancy, head of policy at Scottish Widows, said: “Our current system of auto-enrolment has done so much to boost retirement savings among employees, but self-employed people have been left behind. They are far less likely to be saving into a pension, and while they are more likely to save in other ways, this is not nearly enough to close the gap.
“Government needs to decide on what approach to adopt to help the self-employed prepare for retirement, as they lack formal incentives to save adequately compared to full-time employees. A focus on engagement has been the default and while that will be an important part of the solution, a statutory intervention akin to auto enrolment is likely to be required to improve things materially.”
The data found that the average self-employed person is set to earn an annual income of £10,000 in retirement, which is just over a third of the £27,000 that the average full-time employee is on track to earn.
Worryingly, 24% of self-employed people are now saving less for the long term due to the rising cost-of-living, compared to only 10% of people on a permanent contract.
