Hundreds of thousands of self-employed workers will rely on their businesses to provide them a financial lifeline in retirement, according to a new survey.
Rather than stash cash in a pension, close to 630,000 self-employed workers will carry on working or rely on cash raised from selling their businesses to fund their retirements.
Only a third are saving into a pension, found the survey by pension firm Aegon.
Although a small proportion of self-employed have pensions than employed workers, they do play closer attention to their finances and have larger than average funds.
Three out of 10 have checked how their pensions are performing within the past six months, compared to the UK average of one in four.
They also have average pension pots of £40,400 compared to a national average of £33,900 for the rest.
The self-employed also have higher expectations for retirement than employed workers.
They plan to retire earlier – at 63 years old – with a target income of £45,700, which is almost £8,000 higher than that employed workers expect.
But more believe they will have to work into retirement – 30% compared to 24% of employees.
The firm’s pension director Steven Cameron said: “The research shows the self-employed have particular needs and aspirations when it comes to saving for retirement. There are real risks in assuming that your business can fund you through retirement.
“While future self-employed retirees will benefit from changes in state pensions, they are missing out on being automatically enrolled into a workplace pension with a valuable employer contribution. So it’s worrying that only a third are paying into a private pension although those who do are more engaged and are contributing higher amounts.”
Not all the self-employed are looking forward to a financially comfortable retirement, as just over a quarter will have to rely on the state pension of £155.65p a week.
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