A new report from the Institute of Fiscal Studies (IFS) think tank has laid bare just how dramatically pension saving has crashed among the self-employed. Back in 1998, just shy of half (48%) of the self-employed paid into a private pension. Yet by 2018 this had dropped to just 16%. The contrast with regular employees, as a result of the auto-enrolment scheme, is astonishing. Back in 1998 pension participation among private sector employees was around the same level as with the self-employed, yet by 2018 employed workers were four times more likely to be paying into a pension than those who work for themselves. One contributing factor is the changing face of who makes up the self-employed workforce. For example, since 1998 the proportion of female self-employed workers has risen from 27% to 32%, while the proportion who are working part-time has also grown, by 18% to 24%. Average earnings play a part too. According to the IFS while earnings among people who work for themselves grew until the start of the 2000s, they fell sharply as a result of the financial crisis, and for 2018-19 are still lagging behind the level they were in 1997-98. As the IFS puts it “a remarkable two decades of lost income growth among this group”. Given the added financial burdens faced by people today, even before the pandemic hit, and it may simply be that a significant number of self-employed workers don’t feel they have the money to spare to contribute to a pension. Indeed, affordability is given as the main reason by most self-employed workers for not saving in a pension, though the IFS is sceptical this explains the sheer scale of the fall-off in saving. It also notes that according to polls of self-employed workers, many believe that saving through property ownership is safer and provides a higher return than through a dedicated pension, which is questionable at best. It’s interesting to note that the proportion of self-employed workers saving in other vehicles, such as ISAs or shares, has fallen too over the past two decades. So it’s not that the money that was previously saved in a pension is now saved elsewhere; it’s not being saved at all.