How can we help increase long-term saving among the self-employed?

Self-employed people are incredibly diverse; in their specialisms, earnings, commitments, pastimes, and interests. Unfortunately, one characteristic a very high proportion of self-employed people have in common is that they are not saving sufficiently for their later years and the long-term.

At i2 media research we have partnered with Nest Insight to understand the root causes of this disengagement, and identify potential ways of addressing the problem. We’re delighted to be launching Working for today, preparing for tomorrow: the realities of self-employment and saving (PDF) with Nest Insight this week.

A focus on younger, lower income self-employed people

We focused our research on self-employed people for whom low engagement with lifetime savings is likely to be most problematic as they reach retirement ages: self-employed people on a low income (earning above the auto enrolment threshold for employees – £10,000 per annum, but below median earnings – £26,000) and without other substantial assets, such as their own home. We also focused on the younger self employed, where even small, regular contributions today could generate much better outcomes at retirement.

Long-term savings a lower priority than immediate spending needs

The simplest observation to emerge from the research is that for lower income self-employed people, much more immediate needs, such as food, energy, housing, transport, naturally took priority in their spending behaviours. But what stood out were the different attitudes our research participants had towards being self-employed, and different mindsets as to the importance of lifetime savings and pensions. Most people we interviewed in our research had no actions or plans in place to prepare for the future. While some individuals were worried about their lack of engagement with long-term saving, others had low levels of concern.

People have different reasons for, and mindsets towards, being self-employed

We identified three mindsets towards being self-employed in our research sample, for which we generated the following titles:

  1. “I need it to get by”
  2. “It enables me to able to have a good quality of life, right now”
  3. “It’s my way of life”.

There is more to the issue than low capacity to save

We observed that people’s reasons for being self-employed interact with their intentions to save. Many feel uncomfortable when engaging with pensions and few feel they have the capacity to save. This is not, though, a direct result of their earnings or wealth.  Other important determinants of their engagement included factors such as:

  • perception and use of income
  • business costs
  • views on saving
  • responsibilities
  • certainty of future income
  • ability to cope with income fluctuations.

Addressing the problem using psychological insight and behavioural science

Our research identified a range of attitudes and expectations towards different mechanisms which will encourage self-employed people to save more for their futures. The best received were the most convenient solutions, such as a ‘sidecar’ solution, and top ups on other expenditure.

Based on the types we identified in our research, and the range of factors influencing savings behaviours, we developed a series of recommendations for effective interventions to increase self-employed people’s saving behaviours.  Based on behavioural science heuristics, these included normative messaging, family-oriented messaging approaches, non-conformist approaches, and varying the extent to which communications about their future needs are concrete or abstract.

Next steps

Our research concluded with a series of recommendations for future work to further develop and robustly test the effectiveness of different solutions and approaches. These include:

  1. Validating and extending our typology of self-employed people.
  2. Testing and refining the messaging approaches we developed in the project.
  3. Developing savings products and solutions that better meet the needs of self-employed people (maximising convenience, flexibility and liquidity).
  4. Testing our predictions via a combination of lab based studies and real-world randomised controlled trials.

The challenge to increase self-employed people’s long-term savings behaviours is not trivial, with big implications for people’s quality of life as they age, and for government finances in years to come.  At i2 media research we’re really pleased to be helping to address the challenge. Please read the full research report and get in contact with Nest Insight if you’d like to be involved in supporting the next stages of the research or to discuss it further.

By Professor Jonathan Freeman, managing director at i2 media research

i2 media research limited is based at Goldsmiths University of London. A small interdisciplinary team of experts in consumer insight, user experience research and strategy, i2 explores how humans and technology can work together for the benefit of consumers and business. To find out more, visit