A large majority of self-employed workers are not paying into a pension at present and a significant minority still do not even have a pension scheme, research from Interactive Investor has revealed.

In its fifth Great British Retirement Survey, the provider spoke to some 9,000 workers and found that three quarters (76 per cent) of the self-employed taking part in the research are paying nothing into a pension, and 38 per cent do not have a pension at all.

Interactive Investor said people have more debt at present and less ability to save into their pensions than last year, with the self-employed and young people struggling in particular.

Continuing financial pressures were forcing all workers to take on even more debut — 39 per cent compared with 36 per cent in 2022 — with a quarter of those having more debt stating that it is impacting their ability to save for retirement. Last year this figure was 14 per cent.

Rising debt was also having an impact on pension lump use by the over-55s, as 25 per cent of those withdrawing a lump sum were using it to pay off debt.

Self-employed workers were also often more financially vulnerable, with almost no pension wealth. 45 per cent of self-employed workers interviewed for the survey have had a major life event in the last three years that has changed their future retirement plans.

“Many self-employed workers are facing an uncertain future," commented Interactive Investor head of pensions and savings, Alice Guy.

"More than three quarters are not currently saving into a pension while four in ten have never saved into a pension. The vast majority of employees are now saving into a pension, but self-employed workers are still falling through the gaps, as auto-enrolment doesn’t apply to them.

"They are also much more vulnerable to financial shocks as they don’t receive sick pay or have paid holiday and were disproportionately affected by the Covid crisis.”

The survey has also found that 51 per cent of younger people (age 22-40) have unsecured debt (compared to 47 per cent last year). Of these, 32 per cent are saving less in their pension than they would like due to unsecured debt, up from 22 per cent last year.

“It’s sad to see that so many people are surviving rather than thriving, with more taking on unsecured debt, especially among young people," said Guy.

"More than a quarter of us (28 per cent) have had to access our savings or pensions sooner than planned to help manage current outgoings and one-quarter are using pension lump sums to pay off debt.

“Worryingly higher levels of debt are having a knock-on impact on pension saving with one-third of under 40s contributing less than they would like to their pension due to debt.

"The cost-of-living crisis will cast a long shadow and dampen the ability of today’s young and middle-aged workers to reach a comfortable retirement."

In addition, the research confirmed previous reports that warned of the growing pensions gender gap.

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