Self-employed living in La La Land
Self-employed living in La La Land when it comes to pension saving
- Only 15% are very optimistic about having enough money in retirement
- Overwhelming majority, 75%, don’t regularly save for retirement
- But 50% are optimistic about being able to choose when they retire
A global study looking into the saving habits of the self-employed revealed that in the UK, many are not taking adequate steps to prepare for their future retirement. The research, carried out by Aegon in 15 countries across the Americas, Europe, Asia and Australia, offers an interesting perspective on the self-employed’s views of retirement.
Making sufficient pension provision is a looming issue for the UK’s 4.6 million self-employed*. When it comes to planning, the UK is lagging behind with 75% of the self-employed not regularly saving for retirement, placing them second bottom out of 15 countries surveyed. With low levels of saving, understandably, only 15% of people are very optimistic about having money to live on in retirement.
However, the self-employed enjoy greater freedom than workers with regard to their future retirement. So when it comes to the choice of when to give up work, half of those surveyed were optimistic about the timing of their retirement. Although 53% said they’d still be working after age 65, they cited positive reasons for doing so, like keeping their brain active or because they enjoyed their career. Only one in ten (9%) expected they would never retire.
The introduction of auto-enrolment was designed to get the nation saving. However, the pension reforms not only neglect the self-employed, they come with a further sting in the tail. As well as missing out on valuable employer and Government contributions, those self-employed business owners who employ staff have to pay for their employees’ pension contributions.
Kate Smith, head of pensions at Aegon, comments:
“Against a backdrop of rapidly increasing numbers of self-employed in the UK, there’s a growing concern that this group are increasingly likely to struggle with inadequate retirement income when they eventually give up working.
“The self-employed face unique challenges when it comes to saving for retirement. As well as missing out on a lifetime of employer contributions, a variable income means many don’t have certainty of how much they’ll earn from one month to the next, making saving difficult.
“Preparing for retirement requires a long-term do-it-yourself approach which is currently being overlooked by too many of the self-employed.”
*ONS Trends in self-employment in the UK: 2001 to 2015
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Notes to Editors
- In the UK, Aegon offers retirement, workplace savings and protection solutions to around two million customers and employs approximately 2,000 staff. More information: https://www.aegon.co.uk
- As an international life insurance, pensions and asset management company based in The Hague, Aegon has businesses in over twenty five markets in the Americas, Europe and Asia. Aegon companies employ over 28,000 people and have millions of customers across the globe. Further information: www.aegon.com
- Aegon is the Lead Partner of British Tennis.
Aegon is a brand name of Scottish Equitable plc. Scottish Equitable plc, registered office: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (No. 144517). Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 165548. An Aegon company. www.aegon.co.uk
© 2017 Aegon UK plc