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Is digital technology the key to unlocking the self-employed’s pension participation puzzle?

Pension participation has been revolutionised over the past 6 years. Since the introduction of automatic enrolment in 2012, participation in workplace pensions has hit an all-time high. This is a great success, but one population is being left behind – the self-employed. There is a growing army of self-employed workers in the UK, and they are currently outside the scope of auto-enrolment.

On 26 and 27 March, the Association of British Insurers, the Department for Work & Pensions, and HM Treasury will host a two day “tech-sprint” at Aviva’s Digital Garage in London[1]. This 48 hour event will challenge the best business and tech minds to identify digital solutions that could help address this growing problem.

Alistair McQueen, Head of Savings & Retirement at Aviva, shares ten top facts about the self-employed, their pensions, and the potential for digital technology.

1. The success of automatic enrolment

Auto-enrolment has introduced more than 9 million workers to pensions, and participation is now at an all-time high[2].

2. The forgotten self-employed

To benefit from auto-enrolment you have to be an employee. It does nothing for the self-employed, and this population has increased by 50% since 2000 – fast approaching 5 million, representing nearly one-in-six of all workers[3].

3. Self-employed incomes: Not all rich consultants

A common misconception is that the self-employed are all high-earning consultants, lawyers or accountants. This is not the case. The median income for the self employed is below that of the employed – for both men and women[4]. The self-employed have less income to save.

4. Self-employed ages: Not all millennials

The average age of a self-employed worker is nearly 20 years above that of an employed worker[5] - 46 years old compared to 29 years old. This is significant when it comes to retirement planning, as there are fewer years for the older worker to prepare.

5. Self-employed saving: An all-time low

While the number of self-employed people in the UK is near an all-time high (see #2), the number who are saving into a personal pension is at an all-time low[6]. These two measures appear to be heading in the opposite direction. Self-employed workers up. Self-employed savers down.

6. Self-employed women savers: Fewer than men

Not only are self-employed women earning less than men on average (see #3), they are also less likely to be saving into a pension[7]. This may be “cause and effect”, but the outcome is not positive.

7. Self-employed: Poorer outcomes in retirement


Aviva has calculated that an average self-employed worker could currently expect to amass a pension fund less than half that of their employed counterparts, at retirement[8]. This is a significant difference.

The problems facing the self-employed are clear. The solutions are less so.

The Government has committed itself to examining the retirement challenge facing the self-employed, in 2018[9]. Part of this examination will be the 26 and 27 March “tech-sprint” which will consider how technology might offer a solution. There are plenty of reasons to be  optimistic about retirement savings for the self-employed.

8. The rise of the internet

Aviva’s own research shows that the internet is fast becoming the first port of call for people seeking financial assistance[10]. In the coming decade, it’s expected that the internet will replace the family (“mum and dad”) as the first stop for financial support.

9. An internet for all ages

It would be misguided to assume that technology is just for younger savers. Figures from the Office for National Statistics show that the fastest growing rate of internet adoption is among the over-55s[11]. In the coming decade Aviva predicts that age will be no differentiator in the adoption of the internet. Given that the self-employed are older on average, this is encouraging news.

10. The UK loves the internet

And if technology is going to have an impact anywhere, the UK is a better place than many. According to the World Bank, internet adoption in the UK since 2000 has risen from “mid table mediocrity” to “championship contender”. The UK rivals Japan for the greatest adoption of the internet among developed nations[12], and is ahead of Germany, France and the USA.

In summary

Self-employed workers are a growing population facing a growing retirement crisis. Now is the time to find a solution. Digital technology may be the key to unlocking this pension participation puzzle.

The “tech-sprint” event on 26 and 27 March carries with it the hope of retirement savings for 5 million workers. I wish it well.


[1] https://www.abi.org.uk/news/news-articles/2018/02/next-steps-in-solving-the-self-employment-savings-challenge-government-and-industry-announce-details-of-two-day-tech-event/

[2] https://www.gov.uk/government/statistics/workplace-pension-participation-and-saving-trends-2006-to-2016

[3] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/latest

[4] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/trendsinselfemploymentintheuk/2018-02-07

[5] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/trendsinselfemploymentintheuk/2001to2015

[6] https://www.gov.uk/government/statistics/personal-pensions-estimated-number-of-individuals-contributing-and-average-contribution-by-status

[7] ONS Family Resources Survey, 2014/15

[8] Aviva calculation assumes all workers save 5% of earnings each month, and the employed worker benefits from a 3% additional contribution from their employer each month. All workers save from age 22 to 68. All savings grow at 2.4% pa (after inflation) and all pension products carry a 0.75% annual charge.

[9] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/668971/automatic-enrolment-review-2017-maintaining-the-momentum.PDF

[10] Aviva Customer Attitudes Survey, 2016/17

[11] https://www.ons.gov.uk/businessindustryandtrade/itandinternetindustry/bulletins/internetusers/2017

[12] https://data.worldbank.org/indicator/IT.NET.USER.ZS

Last updated 15/03/2018