New data has been released by the Office of National Statistics (ONS) which shows an alarming drop in the number of self-employed people who are investing in a pension. While just 25% of the UK’s self-employed are actively contributing to a private pension, 40% were doing so as recently as 2008.
Sean McCann, chartered financial planner at NFU Mutual, said: “Pension contribution rates are crashing among the self employed, who make up more than 15 per cent of the UK’s workforce.
“It’s a worrying trend. If just one in four in self-employment are actively contributing to their pensions, around 3.5 million are missing out. While auto-enrolment is making it easier than ever for employed people to save for their retirement, many in self-employment put off saving into a pension in favour of investing in their own business.
“The tax relief alone is a great incentive to make pension contributions, but many entrepreneurs don’t realise that they can use their pension fund to invest directly in commercial property or land, which their business can then occupy and still benefit from the tax advantages a pension gives. These latest statistics suggest many self-employed people may be missing a trick and could be facing having to extend their working lives by years, if not decades.”