Millions of self-employed and part-time workers risk losing around £70,000 in retirement savings, according to a major online pension provider, which has raised concerns ahead of the Chancellor's first Budget.
PensionBee's warning comes as rumours swirl about potential changes to pension tax relief and salary sacrifice, with Chancellor John Healey's first Budget set for Wednesday, October 28.
Invisible Workers campaign findings
PensionBee says a year of evidence from its Invisible Workers campaign, published on October 16, reveals what it says is a bigger problem not being discussed. Namely, that the estimated 4 million self-employed people in the UK, and millions more working through gig platforms or juggling multiple part-time jobs, aren't contributing to a pension system it says is built for traditional employment.
The firm says a worker who earns £25,000 and spends 30 years outside it stands to miss out on around £70,000 in retirement savings.
According to PensionBee, six waves of research over the past year revealed that 57% of gig and temporary economy workers say they can't afford pension contributions, and 74% of self-employed people without a pension don't know their contributions would qualify for tax relief.
Pensions Commission and proposed reforms
It noted that the Pensions Commission, an independent Government advisory body, came to a similar conclusion in its interim report in May, which found that only 4% (one in 25) wholly self-employed workers are actively saving for retirement.
PensionBee also highlighted a call for change from outside the pensions industry, with the Institute for Fiscal Studies proposing in May this year that there should be a requirement for self-employed people filing a Self Assessment to make an active choice about pension contributions when they submit it.
According to PensionBee's research, 66% of UK adults are already in favour of extending automatic pension enrolment to the self-employed through the tax return system. This rises to 78% among 25-34 year-olds.
Their report has called for four reforms, including extending Auto-Enrolment eligibility to the self-employed and fixing the earnings threshold that currently excludes people working multiple part-time jobs, embedding pension prompts into the Self Assessment tax return, building guidance around the life events such as maternity leave and career breaks that widen the gender pension gap, and making pension transfers more efficient.
Customer accounts and official response
The company pointed to accounts from customers included in the report which it says illustrate these “barriers” in practice. These included a gig worker whose agency contracts technically include pension provision but rarely trigger enrolment given how fragmented her bookings are across a number of agencies, and a self-employed mother whose pension contributions fell away across two periods of maternity leave before she took direct control of her own retirement saving.
Lisa Picardo, Chief Business Officer UK at PensionBee, commented: “The barrier sits in the structural disadvantage, not with the person. None of this reflects a lack of willingness to save, or a lack of desire for a good retirement outcome.”
She added: “Every survey in this report finds the opposite: self-employed workers engage with pensions at higher rates than most people assume, and the public, across every income band and age group, backs reform. But self-employed workers still are not saving enough.”
“This is a structural problem, and a structural fix is needed. This report sets out what we found, who it affects, and what needs to change. I hope it gives the Pensions Commission, the Government and the wider industry the evidence and the urgency to keep pushing for reform,” she said.
A DWP spokesperson said: “We recognise that millions are not saving enough for their retirement, with 96% of people whose whole income is from self-employment are not saving into a pension at all.”
“That is why last year we revived the Pensions Commission to review our pensions system as a whole, examining how we can ensure secure retirements for tomorrow’s pensioners,” they added.
“The Commission will publish a final report and recommendations in February 2027, and we will respond swiftly in the Spring with a strategy to deliver a strong, fair, and sustainable pensions system.”
Express.co.uk has approached HM Treasury for comment.
