Only 17% of self-employed people are saving into a pension, according to the Office for National Statistics (ONS).
A report by Citizens Advice has found that the self-employed consider investing their money into a savings account, cash ISA or property a better option.
Based on a survey of 650 people, 3 key issues are preventing the wider adoption of pension saving by the self-employed:
- lack of understanding – 67% do not understand the tax breaks with 25% wrongly thinking that an ISA offers better tax breaks than a pension
- lack of trust – 50% do not trust pensions as a safe place to invest their money
- lack of information – 27% have never received any information or advice about pensions.
Since 2001, self-employment has increased by 32% to 4.5 million. However, the number of self-employed people paying into a pension has halved, falling from 1.1 million in 2001/02 to 450,000 in 2013/14.
Gillian Guy, chief executive of Citizens Advice, said:
“A lack of information and understanding on how paying into a pension can provide an income in retirement means self-employed people are turning to other options to fund their future, with many people not saving enough.
“While property or cash savings may be viable options, people could also benefit from being in a pension scheme.
“It is really important that self-employed people are offered up front information about how pensions can work for them so they can make an informed choice as to the best retirement savings plan.”