IFS suggests low income savers should opt out of pensions

This report found the number of people who held savings outside of a pension increased from 46 to 56 per cent between 2012 and 2017.

This could be due to auto-enrolment raising awareness on the importance of having savings.

It also found the number of people who were confident that their income in retirement will provide the standard of living they hope for has increased from 42 per cent in 2008 to 53 per cent in 2017 and there has been a sharp increase in the amount of employees expecting to receive a pension in retirement, increasing from 63 per cent in 2013 to 73 per cent in 2017.

But there has been a decline in the number of self employed people who expected to receive any income in retirement from a pension, dropping from 57 per cent in 2006 to 43 per cent in 2017. 

Ian Browne, pensions expert at Quilter, said: “This mirrors the decline in pension membership by the self-employed, emphasising the fact that those outside the scope of workplace auto-enrolment are falling behind when it comes to retirement saving.

“With increased numbers becoming self-employed year-on-year, and with the increased use of “gig” economy-style employment practices, we could be witnessing a self-employed pension car crash in slow motion.”

He added: “There is a real danger that people are sleepwalking into retirement without the necessary retirement provisions. Setting clear goals and financial targets are vitally important for good retirement planning and people must start thinking as early as possible about the age at which they want to retire.”

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