The self-employed people unable to save into a pension

Rosie Parsons, 43, and Emma Baylin, 47, are unable to put any cash aside for retirement. Experts reveal how they can start

Self-employed workers often find themselves unable to save for retirement, as a result of irregular income, business pressures or family responsibilities.

For Rosie Parsons and Emma Baylin, these challenges mean they currently have no pension savings.

Rosie, a mother of four, has been self-employed since 2007. She began her career as a wedding photographer before shifting her focus to running an online school for aspiring photographers.

New FeatureIn ShortQuick Stories. Same trusted journalism.

Despite often working 15 to 17 hours a day, including weekends, her priority remains clearing the credit card debt she built up while raising her children.

The 43-year-old from Exeter said: “I was pivoting my business to fit around my children’s needs while building my online course, and there were times I was putting the food shop on credit cards just to keep us going. Child maintenance was limited, and it was a really tough period.

“Now that my course is successful and running well, I still feel any spare money needs to go towards clearing that debt first – it’s costing me far more in interest than I could earn in savings. Once that’s cleared, I’ll be in a much better position to save.”

Rosie, who runs an online school for aspiring photographers, says she will be in a much better position to save after clearing her credit card debt

As a single parent with four children, the financial strain is significant. She explained: “Most families have two adults sharing the financial burden and half the number of kids.

“As a single person, I also can’t spread the tax burden with a partner. Once you hit certain thresholds, you’re paying VAT and higher tax rates entirely on your own. A lot of what comes in has to be saved for tax, which makes it feel like there’s not much left.”

Rosie’s long-term plan is to grow her business sufficiently to reinvest in income-generating assets such as property and stocks. This, she believes, will form the basis of her retirement strategy.

“Right now, I just don’t have spare money to put into a pension. If I did, it would go towards paying off debt first, then building an emergency fund,” she said.

While she doesn’t expect to ever stop working entirely, she hopes to eventually reduce her hours to allow time for volunteering and more freedom.

Her concerns reflect wider trends as research from Funding Circle shows a striking divide between the retirement prospects of self-employed workers and employees.

Only 20 per cent of self-employed people contribute to private pensions, compared with 88 per cent of employees. As a result, the average self-employed worker is on course for a £208,500 shortfall, leaving many reliant solely on the state pension.

Emma Baylin, 47, from Yorkshire, fears she will end up in this position. After 12 years of self-employment running singing workshops and delivering training in cross-sector partnership building, she has been unable to build any savings.

She said several factors have held her back, including: “Not having spare money, not having consistent money – being freelance it can be hard to predict. Sometimes you have more money coming in than you need that month, then you may be short for the following three.

“Having ADHD can also make it all feel a bit overwhelming and not something I can face sorting.”

Emma’s partner does have some pension savings, which may provide support later in life, and she hopes to have paid off her mortgage by the time she retires.

Ideally, she would like to stop working around age 60 to enjoy more time with her partner. “I’m hoping in some way the universe will provide – maybe I’ll win the lottery,” she joked.

Emma, who has beeen self-employed for 12 years, has said several factors have held her back from contributing to her savings (Photo: Gemma Regalado)

Although her workload fluctuates, Emma typically works full-time hours. The income she gets from her singing business only just covers her essential living costs, leaving nothing left to save. Any occasional surplus tends to be spent during expensive periods such as Christmas or school holidays.

Funding Circle’s analysis suggests that at current saving levels, self-employed workers could retire with £10,000 to £11,000 less each year than their target income, even after receiving the full state pension.

For the 2025/26 tax year, the full new state pension is £11,973, while the full basic state pension is £9,175.40.

Thanks to automatic enrolment and employer contributions, people are far more likely to build adequate pension pots. Employees typically contribute around £3,000 a year to their pensions, compared with £2,100 for the self-employed.

With 5 per cent annual growth over 40 years, this leads to a pot of around £318,000 for employees – translating to roughly £12,720 a year in retirement – compared with just £50,700 and £2,028 a year for the self-employed.

Including the projected 2026 full state pension of £12,547, this gives employees an annual retirement income of about £25,267, while self-employed workers would receive only around £14,575. Across a 20-year retirement, that gap amounts to roughly £208,500.

How to build a pension from nothing

If you’re self-employed with no pension savings, here are four steps to start building your pot from nothing:

1.Set up a personal pension as soon as possible: You don’t need to start big – opening a SIPP or personal pension with low minimum contributions lets you begin right away. Even small amounts benefit from tax relief, effectively boosting every pound you put in.

2. Automate small, regular contributions: Pick an amount you can comfortably afford each month – even £25 to £50 – and automate it. Consistency matters more than size at the beginning, and you can increase contributions as your income grows or becomes more stable.

3. Save in line with your irregular income: When you’re self-employed, income fluctuates – so treat good months as opportunities. A useful structure is: base contribution every month and top-ups during high-earning periods. This prevents you from relying solely on stable income months while still allowing flexibility.

4. Use tax planning to your advantage: Pension contributions reduce your taxable income, so planning payments before the end of the tax year can lower your tax bill. This essentially makes saving for retirement cheaper and can motivate you to put more into your pot.