An individual who moves into self-employment after ten years work will miss out on an additional £115,300 in retirement funds after exiting their occupational pension scheme.
Research from Aegon published today (6 November) showed this 39% shortfall affects a total 15% of the UK workforce.
The analysis assumed a 25-year old employee on average earnings becoming self-employed at the age of 35 and continuing contributions of 5% to their pension. With an assumed wage growth of 3% and investment growth on the funds of 4.25% after charges, the individual is expected to have lost £115,300 by state pension age.
Despite the minimum 3% employer contribution level for auto-enrolment, Aegon confirmed many employers pay more or match personal contributions of 5%, giving those within workplace schemes a distinct advantage.
Pensions director Steven Cameron said the self-employed should combat this and aim to increase their contributions as soon as their employers' are lost.
"Leaving this until later on in life will make it considerably harder to catch up and bridge the gap with employees," he said.
Cameron added: "Saving for retirement is often very difficult for the self-employed as many have highly variable earnings and often face foregoing income to invest in growing their business."
Recent data from HMRC quoted by Aegon shows the self-employed currently receive just 1.5% of the overall pensions tax relief granted by the government.
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