- Only 18% of self-employed people save for retirement, despite three quarters saying they want to.
- Auto enrolment has been proposed as a solution, similar to workplace pensions but how this could work for self-employed people is unclear.
- New research from Nest Insight offers some of the first robust evidence that default savings models could be effective for self-employed people.
- The findings suggest that approaches combining accessible savings with pension options might be as effective as pensions alone; and the idea of defaulting into saving was welcomed by self-employed people.
New research published today [Monday 16 June 2025] by Nest Insight, has found that a default approach could help close the retirement savings gap among self-employed people. Only 18% of the UK’s 4.4 million self-employed workers are currently saving into a pension – even though nearly three quarters of them say they want to save for retirement.
The research was funded by the Department for Work and Pensions (DWP) and builds on a multi-year research programme designed to find ways to increase retirement savings among self-employed people. Lloyds Banking Group collaborated with Nest Insight in a design sprint to build a prototype in app mechanism to automatically save into a pension. This latest research finds that ‘autosave’—a default retirement savings mechanism—could significantly increase financial security for people who miss out on automatic enrolment because they don’t have an employer to set up a pension for them. The method preserves the choice and flexibility for those who do not want to, or cannot, save.
Minister for Pensions, Torsten Bell said,
“Self-Employment has become a much bigger feature of our labour market, but with only 18% saving for retirement, far too many are missing out on the opportunity to build up a pension. We must ensure that everyone has the opportunity to secure their financial future. That is why the changing world of work will be a key focus for our upcoming Pensions Review.”
The research included roundtables, in-depth interviews and an online lab-based study with more than 1,500 self-employed people testing the concept of a default retirement saving journey. The study results showed that a default savings journey could be an effective way to increase the levels of retirement saving among self-employed people. Following this, Nest Insight also worked in collaboration with Lloyds Banking Group to explore the concept of autosave in a more realistic setting with a small group of self-employed people. The initial responses of the participants to the idea were positive and suggest it is worth further exploration of an autosave feature embedded within banking platforms and self-employment software platforms, provided it offers transparency and control over contributions, the threshold at which savings rollover into pension saving and the ability to pause or cancel at any time.
The online lab-based study also explored a sidecar-like, or hybrid approach, which may be particularly beneficial for those with irregular incomes. It found that retirement saving accounts which include an element of accessible savings may encourage higher participation rates. The presence of a liquid savings buffer appears to provide a sense of control and reassurance to self-employed people.
Finally, sentiment towards the autosave model of retirement saving was perceived positively by many self-employed people, offering optimism to those aiming to close the self-employment savings gap. Over three in four said that they would like to be offered an opt-out retirement savings method, or that they did not mind.
Graeme Bold, Managing Director, Pensions and Retirement, Scottish Widows (part of Lloyds Banking Group) said,
“The self-employed pensions gap is critical – more than half of self-employed individuals are on track for poverty in retirement, compared to just 25% of full-time workers. Self-employed workers need flexibility, and our study allowed us to test hybrid, flexible savings models tailored to their unique needs. The results are a significant leap forward, enhancing the retirement outlook for the UK’s 4.4 million self-employed. Government and industry need to work together to create a blueprint for auto-enrolment that truly benefits them.”
Will Sandbrook, Managing Director of Nest Insight said,
“This is an important step towards closing the self-employment savings gap. While many have discussed potential solutions, we now have evidence that a default savings journey has real promise. We look forward to trialling and fine-tuning its potential at scale.”
The next stage of the project will explore how default savings journeys could function in real-world settings to support self-employed people. To find out more about collaborating with Nest Insight and DWP on the project, send an expression of interest to insight@nestcorporation.org.uk
ENDS
Notes to editors
The findings can be read in full on the Nest Insight website
Read the report: Simplifying retirement savings for self-employed people (PDF)
Read the technical report: Technical report – Simplifying retirement savings for self-employed people (PDF)
Read the report: Designing self-employed autosave (PDF)
For media enquires please contact
Susan Patterson susan.patterson@nestcorporation.org.uk
About Nest Insight
Nest Insight is a public-benefit research and innovation centre. Our mission is to find ways to support people to be financially secure, both today and into retirement. We conduct rigorous, cutting-edge research, working collaboratively with industry and academic partners to understand the financial challenges facing low- and moderate-income households. We use these data-driven insights to identify and test practical, real-world solutions. Our findings are shared widely and freely so that people around the world can benefit from our work. For more information visit nestinsight.org.uk
About our programme partner
The Department for Work and Pensions (DWP) is responsible for welfare, pensions and child
maintenance policy. As the UK’s biggest public service department, it administers the State Pension and a range of working age, disability and ill health benefits to around 20 million claimants and customers. For more information, visit gov.uk/government/organisations/department-for-work-pensions
