Despite almost three-quarters (73%) of self-employed people taking guidance from financial advisers, they are still falling behind the rest of the UK population in saving for retirement, the latest Scottish Widows Workplace Pensions Report has found.
At the same time, research from think-tank Resolution Foundation has found the earnings of the UK's self-employed are lower than they were two decades ago. This group now makes up one in seven of the UK's workforce.
According to Scottish Widows, while the proportion of self-employed workers has risen by 45% since 2001/02 and those saving 'adequately' has risen from 38% in 2015 to 43% this year, this still lags behind the 56% of other workers.
The report also considered the impact of self-employed workers not being auto-enrolled in a pension. It found a greater proportion of self-employed workers relying on other means to support retirement income, with just over half (51%) looking to cash savings and ISAs.
The report highlighted the greater proportion of workers in this group taking guidance from advisers, with half (51%) being willing to pay for advice on pensions specifically. Scottish Widows suggested this indicated self-employed workers are increasingly engaged in finding a solution to ensure a financially secure retirement.
The group's director of pensions propositions David Holton said that, while the general population has benefited from auto-enrolment, the needs of those who do not have access to workplace schemes had to be addressed.
He added: "With the numbers of self-employed workers in the UK growing, the government and pension providers alike must take advantage of this momentum and offer tailored support on where they can receive information on other savings options that will enable them to better prepare for their retirement."
For its part, the Resolution Foundation report suggested "compositional" effects had accounted for 60% of the fall in self-employed workers earnings from 2001/02 to 2014/15, with the remainder stemming from a purer earnings effect. From 2008/09 to 2013/14, however, 86% of the fall was related to the latter.
Among these effects, the report found a significant drop in those working more than 40 hours, as well as the fall in self-employed workers who also have employees.
Flagging up the scarcity of earnings data for the self-employed, Resolution Foundation economic analyst Adam Corlett said: "Whatever the reason for these shifts, the degree of change reinforces why a full picture of the labour market must include the self-employed as well as the employed."
Aegon head of pensions Kate Smith said the rise of self-employed workers highlighted the growth of the ‘gig economy' and could pose a serious problem for pensions.
Smith also referred to the benefits of the workplace pension and how this growth could exclude an increasing proportion of the population from one of the government's "flagship policies", undermining the success of auto-enrolment.
She added: "While the Resolution Foundation figures indicate many of the self-employed are relatively low earners, as with most trends there will be winners as well as losers and some of these people will benefit by being able to sell their skills to the highest bidder.
"It will be interesting to see whether advisers report any uptick in demand from self-employed entrepreneurs. One of the big risks of self-employment is that, if you are unable to work, then no one is going to cover your income or provide the sick pay that an employer might and advisers may see protection opportunities here."
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