Over a third of self-employed women are failing to save for their retirement

While the number of self-employed women is at an all-time high of 1.7 million, a new report has found that over a third (35%) are not contributing towards a retirement savings fund.

According to the Scottish Widows Women and Retirement Report, not only are many self-employed women not saving for retirement, but only 46% who are saving are managing to save the minimum recommended level. This compares to 56% of employed women and highlights the positive impact auto-enrolment has had on encouraging employed women to save more towards their retirement.

Last week, we reported that those who are self-employed are facing a £115,300 pension shortfall when they are set to retire. The good news for self-employed women who are saving for retirement is that the Scottish Widows report found that 46% who are saving at least the minimum adequate level are managing to save a rate of 16% of their income, which is higher than that being saved by self-employed men, who are saving an average of 14% of their income, and employed men and women (12% and 10%).

Jackie Leiper, pensions director at Scottish Widows, said: “A growing number of women are taking charge of their careers by launching their own business 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 underprepared 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.

“The good news is that when self-employed women do save adequately, they actually put more of their income aside than anyone else – but 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 CEO of The Wisdom Council, added: “Ambition is a major theme that shines through from the women I work with and this is reflected in the increasing number of female entrepreneurs. There is a disconnect however with their aspirations and how it will be realised financially, with few having even considered anything other than personal savings to start their own business.

“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.”