The self-employed are not all as young as one might expect, with almost six out of ten aged over 50 years old, a study shows. However, despite being around the corner from retirement, only a third are saving adequately for their retirement, and two in five are not saving at all, putting increased pressure on retirement income.

According to the study published by Scottish Widows, self employed people are under-saving significantly compared to their employed counterparts. With no access to the State Second Pension, no employer to contribute to their pensions and, under new reforms, no automatic enrolment in to personal accounts, this is putting them in a very vulnerable position, particularly those so close to retirement.

The Scottish Widows pension index, which tracks the percentage of the population saving adequately for retirement, currently stands at 46%. Of those employed in the public sector, this rises to 59% As table

1 shows, the self-employed are more likely to not be saving at all and less likely to be saving adequately than their employed counterparts.

Table 1:	Saving adequately	Not saving
Self-employed	36%	38%
Employed – nationalised industry	56%	20%
Employed – other public sector	59%	22%
Employed - private sector	40%	28%
Employed – charity/voluntary	49%	33%

Ian Naismith, head of pensions market development, commented: “The position of the self-employed is a particular concern.  Losing out on employer contributions, including in the proposed personal accounts,

 means that it is imperative they have a savings plan in place for their retirement.”

“What is more, over half only became self-employed in the last 5 years, highlighting how many of us currently in good employer schemes may find ourselves over 50 and having to strike out alone.”

“It is understandable that as people get older and have greater experience in their profession that they would want to opt for a more flexible lifestyle, but the financial implications of self-employment are still profound.”

The study reveals that under a quarter of self-employed people feel they are able to save regularly. On average they have both a higher mortgage debt of £146,945 and monthly non-mortgage debts of £9,643 compared to employed people, which is likely to impact on their capacity to save.  

Not surprisingly, the self-employed are less optimistic about their retirement than their employed counterparts, with nearly a quarter (23%) believing that, realistically, they may not be able to afford to retire until they are 70 or over, compared to just 16% of employed people.

The study does suggest though that self-employed people are perhaps more motivated in their work. Nearly half (46%) of employed people stated they would stop work tomorrow if they could afford to, compared to 36% of self-employed people. The self-employed also stated that 67 would be the age they would begin to feel angry if they were still working; a good two years more than employed people who stated 65.

Ian Naismith said, “The inability to save is something both the industry and policymakers need to be aware of. With over half of this working group aged over 50 a large proportion will be soon be reaching an age of desired retirement with little personal pension provision in place to help them have a comfortable retirement. Many may well face having to work into their 70s to provide them with the necessary income to live off.”