Self-employed neglecting pensions

Business owners and the self-employed are putting their futures at risk by not saving adequately for retirement, it has been claimed.

Half of self-employed 35-44 year olds have a pension provision of less than £3,500 compared to the average £73,000 for employed people of that age, according to Standard Life.

Some 40% of ‘generation X’ have no pension in place at all, compared to 75% of employed workers who contribute to a private pension.

“The recession has created a cohort of self-employed entrepreneurs who are absolutely focused on maintaining their successful business,” said Andrew Tully, senior pensions policy manager at Standard Life.

“But, by focusing on their business and neglecting their personal finances, self-employed gen X’ers are putting their future at risk.”

Tully said that although the introduction of auto enrolment will force employers to make pension contributions of behalf of employees from 2012, this will not apply to the self-employed, a group that already receives lower state pension benefits.

He added: “This group need to reality check their plans and take steps now to safeguard their income into the future.”

© Crimson Business Ltd. 2010