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Self-employed 'face financial woes in old age'

The self-employed are so switched onto their work that the importance of setting aside money for a comfortable retirement is overshadowed and neglected.

Their willingness to work for long periods and be highly motivated day-to-day suggests they’ll eventually face a financial vulnerability - if their saving habits continue at the current rate.

The ominous verdict, issued by Scottish Widows, comes after its research found that only a third are saving enough for later life, while two in five are not saving anything.

Not even a quarter of company owners quizzed by the life insurers save regularly, whereas setting cash aside is commonplace for the majority (60%) of employees.

The company’s wider questioning revealed these 9-5 workers aren’t as buzzed by their jobs and, presumably as a result, want to retire on their 65th birthday.

In fact, nearly half (46%) of employees would stop work tomorrow if they could - compared with just over a third of self-employed people.

Yet the passion among company owners isn’t translating into prudence: most believe their inability to save means retirement won’t grace their lives until they’re at least 70.

With no access to the State Second Pension, no employer contributions to their pensions and no automatic enrolment to personal accounts, the over-50s are the most vulnerable.

“The position of the self-employed is a particular concern,” said Ian Naismith, head of Pensions Market Development at Scottish Widows.

“Losing out on employer contributions, including in the proposed personal accounts (NPSS), means that it is imperative they have a savings plan in place for their retirement.”

Feb 14, 2007
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