Nearly half (48 per cent) of self-employed people are not on track for even the minimum retirement living standard defined by the Pensions and Lifetime Savings Association (PLSA), research from Scottish Widows has revealed.

The research, which included a new national retirement forecast (NRF), revealed that a number of groups of savers are at risk of missing out on even the minimum lifestyle in retirement, with self-employed savers particularly at risk.

Indeed, according to the research, an average self-employed person is set to earn an annual income of £10,000 in retirement, just over a third of what the average full-time employee is on track to earn (£27,000).

Scottish Widows suggested that this is partly because self-employed people are almost four times more likely to be on low or unreliable incomes, 26 per cent compared to 7 per cent of people on a permanent contract, which can prevent them from saving as much into their pension.

The cost-of-living crisis has also exacerbated these issues, as the research found that one in four self-employed people (24 per cent) are now saving less for the long term due to the rising cost-of-living, compared to 10 per cent of those on a permanent contract.

Commenting on the findings, Scottish Widows head of policy, Pete Glancy, stressed the need for greater support for the self-employed, arguing that while the current system of auto enrolment has done so much to boost retirement saving among employees, self-employed people have been left behind.

"They are far less likely to be saving into a pension, and while they are more likely to save in other ways, this is not nearly enough to close the gap," he continued.

“Government needs to decide on what approach to adopt to help the self-employed prepare for retirement, as they lack formal incentives to save adequately compared to full-time employees.

"A focus on engagement has been the default and while that will be an important part of the solution, a statutory intervention akin to auto enrolment is likely to be required to improve things materially.”

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