Asset managers Fidelity International have issued a stark warning to self-employed higher-rate taxpayers, as new figures reveal that some 61 per cent of were not contributing to a pension in 2022/23.

In addition, it found that almost half (48 per cent) of self-employed additional-rate taxpayers were also not contributing to a pension.

This means that, total, some 167,000 higher or additional-rate self-employed workers are not saving into pensions.

This also means they are missing out on billions of pounds in pension tax relief.

That stats come from freedom of information data obtained as part of Fidelity International’s “No Boss, No Pension” campaign, and contrast with 2024 ONS data that shows 89 per cent of eligible employees saved into a pension in that year.

Marianna Hunt, personal finance specialist at Fidelity International, said: “Across the board, higher earners are some of those most at-risk of under-saving for retirement and nowhere is this more apparent than among the self-employed.

“By not contributing to a pension, they are not only putting their long-term financial security at risk but also missing out on valuable tax relief.”

Hunt added: “For many entrepreneurs, it’s not a lack of income or wealth that stops them from saving into a pension. We urgently need to look at the other barriers or beliefs holding them back so we can avoid a generation of self-employed workers having to face a second-class retirement.”

Self-employed working longer to plug retirement funding gap

Fidelity International’s “No boss, No Pension” was launched last year to raise awareness about the worrying retirement savings gap facing many UK entrepreneurs.

The company’s analysis shows that entrepreneurs face working for four years longer than employees in order to achieve the same retirement income.

Government data shows that the average UK employee aged 45–54 has £70,800 in pension savings, while the self-employed has just £3,300.Fidelity estimate that that the average self-employed person will need to work for four years longer than employees to achieve the same income in retirement.
Losing out on “free money”

Marianna Hunt, Personal Finance Specialist at Fidelity International, says: “Britain’s entrepreneurs are the backbone of our economy, but when it comes to preparing for retirement, many are missing out on billions in free money from the government.

“Pension tax relief is one of the most generous incentives available, yet many of the self-employed are missing out on the opportunity to receive it.

“While the Budget introduced changes that affect how some business owners pay themselves, the core incentives for personal pension contributions remain untouched. For many self-employed workers, these will continue to be the most reliable and tax-efficient way to build long-term financial security.

“Unlike employees, the self-employed don’t have auto-enrolment prompting them to save, and irregular income can make it harder to commit.

“But the impact is stark. Our analysis shows a self-employed worker may need to work four years longer than an employee to achieve the same retirement income.”

Under-saving in this way also means entrepreneurs miss out on pension tax relief.

Fidelity’s analysis of data from HM Revenue & Customs (HMRC) shows that in the 2023/24 tax year, self-employed workers claimed just £1 billion of the £49.8 billion in total income tax relief on pension contributions.