More than two-fifths of self-employed workers do not have a pension and a third say they can't afford to save for retirement, according to new research.
A nationwide study by Prudential has found that 43% of self-employed workers do not have a pension - compared to just 4% of those in employment.
Self-employed workers make up 15% of the UK workforce, with more than 4.8 million people working for themselves. However, the findings show that 36% of these workers say they cannot afford to save for retirement.
Around one in three (31%) say they will be relying entirely on the State Pension (worth around £8,545 a year) to fund their retirement, while 28% will be reliant on their business to provide the income they need.
Self-employed workers are savers but the research found they are more focused on putting money aside for day-to-day emergencies than retirement. Two-thirds of the self-employed save to build up a safety net. However, just one in ten self-employed people see a financial adviser regularly, despite having potentially more complex requirements than someone in employment.
Kirsty Anderson, retirement income expert at Prudential, said: "Saving for retirement is tougher when you are self-employed as there is no one to organise a pension for you and no employer making contributions on your behalf. On top of that self-employed workers often don't have a regular income so many will focus on setting aside money as a safety net if they cannot work."
Freelancer body IPSE has welcomed the report and is calling for action to alleviate the crisis. Simon McVicker, IPSE's director of policy, said: "The sheer volume of self-employed people failing to save for later life is, indeed, an extreme concern, but now there is a real opportunity for both Government and the pensions industry to avert this crisis."
Auto-Enrolment is not the answer, he said. "While the policy has been a success in boosting the number of employees paying into a pension, IPSE's research found that it simply isn't a viable solution for the self-employed. Instead, we support rolling out a sidecar pension scheme, allowing the self-employed to save for later life and also into a separate 'rainy day' fund for emergencies."
IPSE published its own report on the self-employed pensions crisis in June 2018.