Britain’s army of self-employed workers swells to 4.96 million, driven by women

The number of self-employed workers in the UK hit 4.96million at the end of June as more women boosted the ranks than, official figures show.

Labour market data published today by the Office for National Statistics showed the employment rate for women rose to a record high of 72.1 per cent in the three months to June 2019. 

And although more men were self-employed than women, their number fell by 23,000 on the quarter to 3.29million, whereas the number of women working for themselves rose by 51,000 to reach 1.67million. 

The number of women working for themselves rose by 51,000 to reach 1.67 million in June

The number of women working for themselves rose by 51,000 to reach 1.67 million in June

Helen Morrissey, pension specialist at Royal London, said the figures highlighted the increasing need for Government to review how its pensions policy supports the self-employed to save for their retirement. 

She said: ‘Today’s figures show we have a growing army of people who are choosing to go down the self-employment route. 

‘While this can bring more flexibility this group are particularly vulnerable when it comes to planning for retirement. 

‘The Government can no longer ignore the needs of almost 5million people and it must look at how to bring the self-employed into the auto-enrolment regime so they can safeguard their future by saving into a pension.’

This is Money has been campaigning for Government to do more to support the growing number of self-employed workers in Britain, including introducing more flexible elements to traditional pensions and creating a means for those filling in self-assessment tax returns to bump up contributions at the same time. 

How to fix the self-employed savings crisis 

1. Government should consult on including a prompt to contribute to a self-invested personal pension for all individuals filling out a self-assessment tax return within the tax return. 

 2. NEST, the Government-backed pension scheme, is currently trialling ‘side-car saving’. This allows savers to contribute to their pension and benefit from tax relief, but if they need early access to some of their savings, they are given this without penalty. This should be extended to Sipps, to allow the self-employed more flexible saving behaviour. 

3. Government should match contributions made by self-employed individuals to their pension to account for the contributions they ‘lose’ by not being employed and eligible for auto-enrolment. 

Earlier this year, research developed by This is Money and Fidelity International found that 62 per cent of self-employed people today have no pension savings at all, compared with 32 per cent of employed workers.

It echoes an older study conducted by the Office for National Statistics that showed a clear divide between employees and the self-employed when it comes to private pension wealth.

In 2016, among the 35 to 54 age group, 45 per cent of the self-employed did not have any private pension wealth.

Those aged 55 were only slightly better prepared for retirement, with 30 per cent lacking any pension savings.

On the flipside, a larger proportion of the self-employed have net property wealth of £250,000 and above.

The Association of Independent Professionals and the Self-Employed has now joined our campaign, after sharing its own research that showed self-employed women are 13 per cent less likely to have a pension than men.

According to IPSE analysis, the current estimate is that around 1,141,000 self-employed women do not have a pension. Nearly half – 45 per cent – have no savings provision through pensions, Isas, assets or anything else.

Meanwhile, more and more women are becoming self-employed, with 63 per cent more women working for themselves in 2019 than were in 2008.

If this trend continues, it could mean that in 10 years there will be over 2 million self-employed women without a pension. Worse, there could be 1.2 million self-employed women with no savings for later life at all.

IPSE head of research Chloé Jepps said: ‘These shocking figures show why This is Money’s campaign on the self-employed pensions crisis is so important. 

‘And why we are uniting our calls to the Government and pensions providers to do more to make sure freelancers have fair access to saving.

 Government must quickly defuse this crisis by encouraging more pensions providers to roll out the sidecar pension to self-employed people.                                   Chloe Jepps, IPSE

‘More women than ever before are enjoying the freedom and flexibility of self-employment, especially new mums. This has helped boost the number of highly skilled female freelancers, which has risen by 63 per cent. 

‘But they are simply not getting the support they need to save for later life.’

Jepps argues that as more women go into freelancing it is essential that they are given the opportunity to save in a way that works for them. Pensions designed for people in large companies ‘simply don’t cut it’.

She added: ‘The Government has already taken important steps to tackle the self-employed savings crisis, but it’s clear from these figures that more needs to be done.

‘We agree with This is Money that the Government must quickly defuse this crisis by encouraging more pensions providers to roll out the sidecar pension to self-employed people across the UK. 

‘It should also better inform people about the need to save and offer more jargon-free pensions guidance for freelancers.’

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