Personal Pension  

Three out of four self-employed have no pension

Three out of four self-employed have no pension

The average self-employed Briton is falling far behind in terms of their earnings, pension and insurance provision, according to Drewberry.

The latest Drewberry survey revealed almost three quarters (73 per cent) of Britain's self-employed still have no personal pension while just over half (51 per cent) of those who do, don’t even know how much is in their pension pot.

This year's survey of 3,000 working Britons showed among those self-employed who know how much they contribute to their pension, 91 per cent contribute 10 per cent or less of their take home pay to their pension.

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The self-employed are twice as likely (71 per cent) as their full-time counterparts (35 per cent) to have just £200 or less to spend each month after meeting basic living expenses, the poll found.

In total, 63 per cent of self-employed Britons describe their finances as ‘just about managing’ or worse.

Among those who knew when they started their personal pension, 34 per cent of self-employed Britons didn’t start contributing until they were at least 36-years old, compared to 11 per cent of full-time employees.

Just a quarter (25 per cent) of self-employed Britons have life insurance, compared to 39 per cent of full-time employees.

Only 5 per cent have critical illness cover and just 1 per cent has income protection even though 46 per cent have less than £1,000 in cash savings to fall back upon and no sick pay.

Tom Conner, director of Drewberry, said: “This year’s results highlight the pressures that are being exerted by the on-going ‘Uberisation’ we’re seeing in the UK’s employment market.

“Last year our survey clearly identified that the growth of the ‘gig economy’ meant that Britain’s self-employed were fast becoming a ‘financial underclass’. This year’s results show that nothing has arrested the decline.

“Today, the average self-employed Briton has far less discretionary income available each month than their employed counterparts with over 70 per cent of self-employed respondents currently having £200 or less a month after meeting their regular outgoings.

“This explains why almost two out of three self-employed Britons now describe their finances as ‘just about managing’ or worse.”

The survey also highlights that over a third of self-employed Britons don’t get around to funding a personal pension until they’re in their mid-30s or later.

“As any adviser will tell you,” says Mr Conner, “the long-term nature of a pension means that there’s a huge ‘opportunity cost’ to starting a pension later in life.

"In a recent exercise, we calculated that someone who starts a pension at age 25 will have around twice the pension pot at age 65 as someone who waits until they’re 35 and four times as much as someone who doesn’t start until they’re 45 years old.”

The Department for Work & Pensions is currently undertaking a review of auto-enrolment, including extending its coverage to include groups such as the self-employed.