Investment platform, AJ Bell, has warned that millions of people could be sleepwalking into “retirement misery”.

New research from the Institute for Fiscal Studies (IFS) has shown that approximately 3.5 million self-employed workers in the UK are not saving into a private pension.

the ata revealed that the proportion of self-employed workers saving for retirement has declined over the last two decades, from 48% in 1998 to just 16% in 2018. Over the same period, however, the IFS figures showed that the number of self-employed workers has surged – from 3.8 million to 4.8 million – reflecting a rise of 12.9% of the workforce to 15.1%.

In response, AJ Bell suggested that stagnating average earnings since the turn of the century could explain the massive drop in savings levels.

Senior analyst, Tom Selby, said that automatic enrolment had at least “started the process” of getting employed workers saving something for retirement.

“However, the reforms do not cover almost 5 million self-employed workers, the majority of whom are not saving in a pension at all and risk facing severe financial difficulties in later life,” Selby commented.

“Self-employed retirement saving has fallen off a cliff over the past two decades. In 1998, roughly half of self-employed workers were saving in a pension – fast forward 20 years and the figure had plummeted to just one in six.

“Make no mistake about it – without urgent action, there is a real risk millions of people will sleepwalk into retirement misery.”

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