All but the highest earning self-employed workers are turning their backs on pensions according to new figures published today by HM Revenue and Customs.
The figures contained in HMRC’s latest personal pension statistics bulletin flags up the challenge the government faces to boost pension saving among the self-employed.
In December 2017, the government published its review into auto-enrolment saying it planned to conduct targeted interventions to work out the best method to increase saving among the self-employed.
It followed this up a year later with a report setting out plans for carrying out these trials.
But the HMRC figures published today hint at the scale of the task, as they show both contributions to pensions and the cost of making them.
Hargreaves Lansdown has compared the two to give the effective rate of tax relief granted for contributions into self-employed pensions.
Among the self-employed, it points out the effective tax relief granted in 2016/17 was 40 per cent, suggesting there are few basic rate tax payers taking advantage of saving for retirement.
Furthermore, the self-employed contribution figure for 2017/18 is absent from the latest release.
Hargreaves Lansdown senior analyst Nathan Long says: “Delve deeper and there are clues that all but the highest earning self-employed workers are turning their backs on pensions.
“It’s a reminder that a lot rests on the government’s work where they’re testing nudges to boost saving among the self-employed. If this proves ineffective a more radical shake up to the incentives will be required.
“The amount the self-employed contributed in 2017/18 is unusually absent from the latest numbers.”