London, 20 February 2025: A lack of clarity about how pensions work, rather than a lack of willingness to save, is one of the biggest barriers preventing self-employed people from building retirement savings, according to new research from PensionBee, a leading online retirement savings provider.
Nearly three-quarters (74%) of respondents were unaware that self-employed pension contributions receive tax relief, pointing to a fundamental knowledge gap that may be suppressing engagement at the very first hurdle. Without understanding this important incentive, pensions struggle to compete with more familiar and accessible saving products.
The findings suggest that uncertainty, rather than disengagement, is driving inaction. The single most common response, more than a third (34%) said they did not know when they would feel comfortable starting pension contributions, indicating decision paralysis rather than outright resistance. While 31% said monthly contributions would be their preferred approach, irregular income was cited as the biggest barrier (38%), highlighting a disconnect between how pensions are structured and how self-employed earnings actually fluctuate.
While two-fifths (39%) of respondents said they would not reduce any existing savings to make room for a pension, a clear majority (61%) would be willing to reduce or stop at least one existing saving habit in order to begin pension saving, signalling meaningful openness to engagement if the right trade-offs are made clearer.
Flexibility remains a critical unmet need. While 38% said they needed a savings approach that could cope with irregular income, only 8% said quarterly contributions would suit them, suggesting current contribution models do not reflect the realities of self-employment. Nearly one-third (31%) said they wanted clearer, personalised guidance on what they can realistically afford to contribute, reinforcing that income volatility makes it harder to judge sustainable saving levels.
Taken together, the findings reinforce a wider policy challenge. Automatic enrolment has transformed pension saving for employees, but the self-employed remain largely excluded from any equivalent default system. This research suggests the issue is not a lack of interest in retirement security, but a pensions framework that assumes regular pay, predictable cashflow and a level of financial confidence that many self-employed workers simply do not have.
As the Pensions Commission and policymakers revisit the future of pensions adequacy, these research results strengthen the case for solutions that extend beyond the employed workforce, whether through new defaults, better integration with the tax system, or products explicitly designed around irregular income. Without reform, millions of self-employed workers risk remaining outside the pension system altogether, not by choice, but by design.
Lisa Picardo, Chief Business Officer UK at PensionBee commented: “Among this group of invisible workers, the issue isn’t a lack of interest, it’s a lack of visibility and understanding. The fact that nearly three quarters of self-employed workers without a pension are unaware that contributions benefit from tax relief helps explain why pensions are often overlooked altogether. Many are effectively ‘invisible’ to the pension system.”
“These findings reinforce the need for policy reform. As the government looks at improving outcomes for the self-employed, the focus must be on clearer guidance, better integration with Self Assessment, and pension solutions that genuinely accommodate irregular income. Without that, generations of invisible workers risk being left behind.”
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