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One in three self-employed women have no pension savings  

Joanna Faith
Written By:
Joanna Faith

More than a third of self-employed women are saving nothing for retirement, new research reveals.

While the number of female entrepreneurs in the UK has hit an all-time high of 1.7 million, 35 per cent – or around 600,000 women – have no pension savings, according to the latest Scottish Widows Women and Retirement Report.

Even those who do put away something for their future are not saving enough for a comfortable retirement, the report found, with less than half of self-employed women (46 per cent) saving the minimum recommended level, compared to 56 per cent of women who are employed by a company or organisation.

However, there is some good news. Those self-employed women saving the minimum adequate level are among the best savers in the country. Their average savings rate is 16 per cent of their income, which is higher than that of self-employed men (14 per cent) and higher than the average for both employed men and women (12 per cent and 10 per cent).

Jackie Leiper, pensions director at Scottish Widows, said: “A growing number of women are taking charge of their careers by launching their own businesses or working as freelancers – 700,000 have set up on their own since 2005, and 1.7 million women are now self-employed.

“This raises real concerns when we consider that women are historically under-prepared for retirement and that self-employed women do not benefit from the safety net of auto-enrolment, which has helped boost female employees’ savings since its introduction.”

Earnings of female entrepreneurs vary widely, which may explain the polarisation in savings. Four out of five self-employed women who save inadequately earn less than £20,000 a year, according to the report.

Leiper said: “The proportion of female entrepreneurs saving at all has not grown in the past decade. It’s clear that reform is needed to drive a step-change in retirement preparations for the self-employed, in the same way that auto-enrolment has for employees in the workplace.”

Anna Lane, founder and chief executive of The Wisdom Council, a majority female-owned and run business operating in financial services, added: “Thirty per cent of businesses fail in the first two years and so this risk paired with the risk of not putting money aside for the future is a double-edged sword often faced by female entrepreneurs. In fact, many women I talk to see their business as their retirement fund.

“We need to see more flexibility and innovation in long-term savings propositions that acknowledge the different earning patterns of the self-employed.

“We must recognise that this group is often more focused on annual tax returns as a point when income is known for the year and be open to reviewing other tax incentives to encourage saving.”