I try to avoid hyperbole on this blog, but the IFS report on ‘Retirement saving of the self-employed‘ makes for shocking reading.
As per the intro summary…
“The proportion of self-employed workers contributing to a private pension has been steadily declining since the 1990s. This is in contrast to private-sector employees, for whom the rate of pension participation has dramatically increased as a result of automatic enrolment. Furthermore, even before the introduction of automatic enrolment, the rate of decline in pension participation was faster among the self-employed than private-sector employees.”
… the report also looks at the degree to which a lot of pension provision is, in reality, done though other savings…. but….
“The proportion of the self-employed saving in other forms, such as savings accounts, individual savings accounts (ISAs) and shares, has also been declining over the past two decades.”
… and the ownership of housing… but
“The average wealth held in primary housing has increased dramatically over the last two decades as a result of rising house prices (while rates of owner occupation have fallen). Primary housing is therefore taking up an increasing proportion of the resources of the self-employed, which for some may crowd out pension saving. However, the trends over time in owner occupation and average housing wealth are similar for employees and the self-employed, so it is not obvious that this would explain the faster decline in pension saving among the self-employed.”
And two fairly damning observations:
- Attitudes towards pensions among the self-employed do not appear to have changed over the past decade in a way that could explain the decline in pension saving
- The proportion of private-sector employees contributing to a pension fell more gradually over this period and, since 2012, has increased sharply due to automatic enrolment.
It’s sometimes hard to see how ‘working as a freelancer’ is anything other than a veiled trap that many workers are stumbling into.