Is this the next big pensions crisis? Self-employed pension savings hit record lows – and that’s even before the pandemic hit 

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  • The self-employed paid £830m in personal pensions in 2019/2020
  • This is down from £1.15bn a year ago, and the lowest on record
  • As of the last quarter of 2019, there were over 5m self-employed people

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Levels of self-employed pension savings hit record levels in the year before the pandemic, the latest figures from HM Revenue show.

Despite more and more people working for themselves in recent years, the amount paid in individual pensions by this growing army of workers has been declining over the past two decades.


Some £830million was paid in individual pensions by self-employed workers in the 2019/2020 financial year, down from £1.15 billion a year earlier, and the lowest on record.

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Pension contributions by the self-employed fell from £1bn before the pandemic

The decline in contributions refers to the financial year ending in April 2020, which did not capture the impact of the continuing lockdown that forced many people to stop working.

Figures for the 2020-2021 COVID year would show an even bigger drop in pension savings among the self-employed, given that many could not access government help if they were left without work due to COVID.

A recent survey of self-employed workers by financial advisory website Fair showed that half of those who were saving in pensions before the pandemic cut or suspended contributions in response.

Clearly, those who run their own businesses have seen hatchers turn down – and often, it has been their contributions to pensions that have been one of the ‘overheads’ for the sacrifice.

Tom Selby said, “Given the increase in the number of self-employed workers over the past two decades, the amount being saved in pensions among this segment of the labor market has fallen dramatically, both spontaneous and extremely worrying.” Head of retirement policy at AJ Bell.

I am self-employed and want to set up a pension – how do I get started?

This Money’s pension columnist, Steve Webb, answers a reader here about what steps to take.

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HMRC data show that individual pension contributions by the self-employed have declined over the past twenty years.

Some £2.5 billion was paid by the self-employed in 2001–2002, reaching £3.5 billion in 2007–2008, then falling and falling to less than £2 billion since 2012–2013 .

This is despite a steady increase in the number of people deciding to go freelance in recent years.

As of the last quarter of 2019, there were more than 5 million self-employed people in the UK, up from 3.2 million in 2000, according to data from the Office for National Statistics.

And those working for themselves have strongly contributed to employment growth in the labor market, representing 15.3 percent in employment, up from 12 percent 20 years ago.

While all eligible employees are automatically signed up for a workplace pension, the self-employed have to set up a pension plan themselves.

As a result, 88 percent of workers are saving in pensions, compared to only 14 percent of the self-employed, recent figures show.

Last year, the Institute for Fiscal Studies found that just one in five of Britain’s self-employed were saving in pensions, compared to 48 percent two decades ago.

Pension contributions paid by the self-employed have declined over the past two decades (Source: AJ Bell/HMRC)

Pension contributions paid by the self-employed have declined over the past two decades (Source: AJ Bell/HMRC)

“While automatic enrollment has been successful in increasing pension savings among employed workers, it does nothing for the self-employed,” Selby said.

“The government had earlier promised to extend the principles of auto-enrolment to the self-employed, but so far we have seen little progress.

‘Without a pension plan and a similar contribution, it is difficult to see how policymakers could dramatically shift the dial on self-employed retirement savings.

‘People are always on the lookout for the next big pension crisis – it could happen.

‘If the government does not take steps and does nothing to boost the level of savings among the self-employed, lakhs of people may face a retirement disaster in the not-too-distant future.’


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