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Self-employment boom hides savings time bomb

The dramatic rise in the number of self-employed people could be storing up long-term problems as many sole traders are failing to set aside money for their retirement.

A new report from the Federation of Small Businesses (FSB) has found that less than a third (31%) of self-employed people are saving into a private pension and 15% do not have any retirement savings at all. Its research also shows that 27% plan to rely on their business to fund their retirement, even though many self-employed individuals earn a low income.


The FSB is urging ministers to come up with a savings solution for the self-employed; sole traders are not currently catered for by automatic enrolment - the Government scheme that is sweeping millions of employees into workplace pensions saving.


More than 15% of the UK workforce is now self-employed; this is the highest level in 40 years, up from 12% in 2000 and 8% in 1980.


Mike Cherry, FSB National Chairman, said: 

"Self-employment now stands at the highest level since records began. This should be celebrated as it brings freedom and flexibility to millions of people. Yet policy-makers have been slow to respond to the boom in self-employment and are therefore playing catch up. If we do not act now to adapt to this changing workforce, we will only be shoring up problems for the future."

Many of the self-employed, he added, 

"are being shut out of financial services like mortgages or personal insurance because they don't fit the usual mould. More must be done to support these workforce pioneers."

For its report, Going it alone, moving on up: Supporting self-employment in the UK, the FSB surveyed 1,600 self-employed people. Respondents cited many benefits of being self-employed, including: freedom and independence at work, a better work-life balance and the chance to fulfill a personal vision.

However, the report also highlights significant challenges facing self-employed workers, including the uncertainty of not having a fixed or regular income, the lack of safety net if they fall ill or have to take time off and the need to constantly find new business.


The survey shows that income levels for self-employed workers vary widely. While 32% said they earned more than £2,000 per month, 41% claimed to be earning under £1,000 per month and 19% said they earned less than £500 a month.

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