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Long-term decline in self-employed pension participation

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New statistics released this week have highlighted a sharp, long-term decline in pension participation among self-employed workers in the UK. This decline comes despite a steady increase in eligible employees participating in workplace pension schemes since the introduction of automatic enrolment in 2012.

Figures from the Department for Work and Pensions (DWP) show that overall employee participation in workplace pensions has increased from under 60 per cent in 2009 to 88 per cent in 2020, with particularly strong growth following the introduction of auto-enrolment in 2012.

DWP statistics also revealed that annual savings among those eligible for workplace pensions increased from £100.4 billion in 2019 to £105.9 billion in 2020. This was despite fears that eligible workers might reduce or stop contributions due to the COVID-19 pandemic.

However, figures for self-employed workers showed a long-term decline in pension participation, dropping from 21 per cent in the 2009-2010 year to 16 per cent in 2019-2020. Despite the long-term decline since 2009, figures also showed that self-employed participation in pension schemes increased by 2.4 per cent in 2019-2020.

Commenting on the data, which also showed low levels of participation among groups such as Pakistani and Bangladeshi workers and micro employers, Hargreaves Lansdown’s Senior Pensions and Retirement Analyst Helen Morrissey said: “The evidence points to the enormous impact that auto-enrolment has had on the nation’s pension savings behaviour over the past decade.”

“The participation of under-represented groups such as lower earners and younger age groups has been boosted massively. However, gaps clearly remain. The self-employed are out of scope and falling further behind and while the participation of Pakistani and Bangladeshi people has grown, they are still playing catch up.”

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