When you run a small business it can be easy to get caught up in the daily hustle and bustle of winning new customers, delivering a great service and keeping your clients happy. Meanwhile, some of the less immediate - but equally important - tasks, such as planning for your retirement, are inevitably put on hold.
With this in mind, we recently undertook some research with the Freelancer and Contractor Services Association (FCSA) to find out just how prepared self-employed people are when it comes to their retirement.
A quarter (25%) of the 490 people we surveyed said that they have no current plans or arrangements to fund their retirement whatsoever, while just under half (49%) said they make contributions towards the State Pension. Meanwhile, a quarter (25%) said that they contribute into a non-employer private or personal pension plan.
Some small business owners appear to rely on pension funds that they paid into during their previous careers in employment. Around a quarter (28%) said they have a legacy employer pension that they no longer pay into, while 10% said they have an employer pension plan that they still contribute towards.
Interestingly, just 4% of the people we surveyed said that they plan to sell their business in order to support their retirement, while a fifth (21%) said they have other investments, such as property or ISAs, that will help to support them.
Finally, our survey found that small business owners seem to be divided on the question of whether pension auto-enrolment should be introduced to the self-employment sector. Almost half the respondents (45%) said they would opt in to this kind of arrangement if it existed for self-employed people. By contrast, 24% of survey respondents said they would choose to opt out of pension auto-enrolment, while nearly a third (33%) said they didn’t know what they would do if they were presented with the option.
With self-employment in the UK rising steadily, the issue of retirement planning for small business owners is bound to become a major talking point in the months and years to come.
Ready to start planning for your own financial future? Find out more about pensions and how to save for your retirement when you’re self-employed in our handy guide.