Less than a quarter (23 per cent) of self-employed households are on track for a moderate income in retirement, according to the latest figures from Hargreaves Lansdown.

By comparison, almost half (46 per cent) of households where the main earner is employed by a company were on the path to a moderate retirement.

When looking at households expected to reach a comfortable retirement income, 7 per cent of the self-employed are on track, compared to 16 per cent of those employed by a company.

Hargreaves Lansdown noted that self-employed workers were less likely to contribute to a pension due to fluctuating earnings and not being able to access the money until they are at least 55.

It therefore argued that the industry, government and self-employed workers need to look beyond pensions to support the self-employed in boosting their retirement resilience.

“We know the nation’s retirement resilience needs a boost, but when we drill down into the figures, we see certain groups are suffering more than most,” commented Hargreaves Lansdown head of retirement analysis, Helen Morrissey.

“The latest data from Hargreaves Lansdown’s Savings and Resilience Barometer shows the self-employed lagging. In many ways it’s not surprising: The self-employed are not covered by auto-enrolment and volatile income patterns might make them hesitant to lock money away.

“Government data has shown the self-employed are more likely to use assets such as property but given the outlook for falling house prices and high mortgage costs, many self-employed people may be a bit more reluctant these days to sink their money into bricks and mortar.”

She argued that there was a “yawning chasm” that needs to be addressed if self-employed workers were to build up enough savings to give them a decent income in retirement.

“For those who are unwilling to invest in a pension, then a Lifetime ISA (LISA) could be an option worth considering,” Morrissey continued.

“Further reform could do more to make the LISA even more attractive as a retirement savings vehicle for this group. As it currently stands, you can only open a LISA if you are under 40.

“Given that many people become self-employed later in their career extending this to age 55 could do more to help this group boost their retirement prospects.”

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