A lack of certainty around how pensions work, rather than an unwillingness to save, is acting as one of the largest barriers to self-employed people building up retirement savings, according to research from PensionBee.

Its study found that 74 per cent of people were unaware that self-employed pension contributions received tax relief.

PensionBee said this pointed to a fundamental knowledge gap that could be supressing engagement at the first hurdle, and a lack of understanding of this incentive was hampering the appeal of pensions compared to more familiar and accessible saving products.

More than a third (34 per cent) said they did not know when they would feel comfortable starting pension contributions, which the provider believed indicated decision paralysis rather than resistance.

Although 31 per cent of respondents said monthly contributions would be their preferred approach, 38 per cent cited irregular income as the biggest barrier, emphasising the disconnect between how pensions are structured and how self-employed earnings fluctuate.

While 39 per cent said they would not reduce any existing savings to make room for a pension, 61 per cent would be willing to reduce or stop at least one existing saving habit to start pension saving.

The research also showed that flexibility remained a crucial need that was not being met.

Nearly two fifths (38 per cent) felt they needed a saving approach that could cope with irregular income, but just 8 per cent believed quarterly contributions would suit them.

Almost a third (31 per cent) said they wanted clearer, personalised guidance on what they can realistically afford to contribute.

PensionBee said the findings reinforced a wider policy challenge, as while auto-enrolment had transformed pension saving for employees, the self-employed remained largely excluded from any equivalent default system.

“Among this group of invisible workers, the issue isn’t a lack of interest, it’s a lack of visibility and understanding,” commented PensionBee chief business officer UK, Lisa Picardo.

“The fact that nearly three quarters of self-employed workers without a pension are unaware that contributions benefit from tax relief helps explain why pensions are often overlooked altogether. Many are effectively ‘invisible’ to the pension system.

“These findings reinforce the need for policy reform. As the government looks at improving outcomes for the self-employed, the focus must be on clearer guidance, better integration with self-assessment, and pension solutions that genuinely accommodate irregular income. Without that, generations of invisible workers risk being left behind.”

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