The UK’s record number of self-employed are fast becoming a pension and protection underclass, as they fall behind their employed peers when it comes to pension provision, according to new research.
Nearly half (46%) of self-employed Britons believe they’ll never be financially secure enough to retire, compared to 19% of those who are employed, revealed the study by Drewberry.
While there is a surging growth in the number of self-employed workers in the UK, thanks to the growth in what’s being called the ‘gig economy', today’s increasingly aged self-employed have fallen behind when it comes to everyday protection planning and pension provision.
In an annual survey of 2,000 British workers, 32% of self-employed don’t know how they’re going to fund retirement, compared to 16% of employed Britons, whilst 38% of the self-employed don’t have a pension, compared to 10% of employed Britons.
Being self-employed means you’re also around 50% less likely to have individual protection or medical insurance. Almost 22% of the self-employed participants admitted they had no idea how they’d cope in the event of a long-term illness while, almost half said they’d be forced to rely on their savings – even though very few have anything like the savings this would require.
Tom Conner, director of Drewberry, said: “Our findings suggest that employed Britons are almost three times more likely to have income protection insurance [8.4%] and around twice as likely [8%] to have critical illness cover than their self-employed peers. Meanwhile, more than twice as many employed people [9%] currently have private medical insurance.
“What’s probably most worrying is that it’s difficult to see anything that will counteract this disparity going forward. Recent employment trends, coupled with auto-enrolment, suggest that the gap between the employed and those who work for themselves is only going to grow from here.”
Recent employment trends
The number of self-employed people in the UK increased by 273,000 to 4.79 million from June to August 2016, equivalent to 84.3% of all people in work, according to the Office for National Statistics.
Mr. Conner said: “The number of self-employed workers is growing almost four times faster than the number of employed and the great weight of this growth is coming from the part time self-employed. This reflects the fact that so many Britons are being forced to work well into their dotage.
“The number of self-employed people over 65 has more than doubled in the past five years alone while there’s now an estimated 3,000,000 UK workers over the age of 60. For a great many, this is the legacy of failing to address their retirement earlier in life and it’s a trend that we expect to grow based on the findings of our latest survey.”