A shocking 82% of self-employed workers in the UK—including freelancers, contractors, and small business owners—aren’t paying into a pension, putting them at serious risk of retirement poverty, according to NEST Insights.
With the full State Pension (£11,973/year) falling short of the minimum living standard (£13,400/year for a single person), millions could face financial hardship in later life.
Why Are So Many Self-Employed People Missing Out?
1. No Auto-Enrolment
Unlike employees, who benefit from automatic workplace pension deductions, the self-employed must manually set up and fund their pensions.
In 1998, 60% of self-employed workers earning over £10,000 saved into a pension.
Today, just 18% do—despite 75% saying they want to save for retirement.
2. Income Volatility Makes Saving Harder
Freelancers and gig workers often face irregular earnings, making consistent pension contributions challenging.
3. Lack of Hybrid Savings Options
Research shows 57% of self-employed workers want a mix of accessible savings and locked-away pension funds—but no single product currently offers this.
For more on retirement planning, see MoneySavingExpert’s pension guide.
How to Take Control of Your Retirement Savings
1. Open a Self-Invested Personal Pension (SIPP)
Tax-efficient (you get 20-45% tax relief on contributions).
Flexible contributions (pay in when you can).
Investment control (choose your own funds).
Compare providers at Hargreaves Lansdown.
2. Set Up a Direct Debit (Even a Small One)
Just £100/month at 5% growth = £150,000+ after 30 years.
Start small and increase when cash flow allows.
3. Use a Lifetime ISA (LISA) for Shorter-Term Goals
25% government bonus (up to £1,000/year).
Can withdraw tax-free after age 60 (or for a first home).
Learn more at Which? LISA guide.
4. Make the Most of Tax Relief
Basic-rate taxpayers: Every £80 contributed becomes £100 in your pension.
Higher-rate taxpayers: Can claim additional relief via tax returns.
What’s the Solution for the Self-Employed?
Experts argue that auto-enrolment should be extended to gig workers and freelancers. Until then, taking personal responsibility is key.
“Small, consistent contributions add up. Even £50 a month now could mean £50,000 extra in retirement.” – Interactive Investor
Final Thoughts
The self-employed pension gap is a ticking time bomb, but starting early—even with small amounts—can make a huge difference.
For more tips, visit GOV.UK’s pension guidance.
