Prudential’s Class of 2012 survey found 46% of small business owners have no private pension savings in place.

Nearly a fifth (18%) of this group do not intend to save for retirement and plan to continue working instead.

More than a quarter (27%) of the 448 people polled said they prefer to invest in their company rather than a pension, while 23% favour re-investment over any other form of personal saving.

Stan Russell, retirement expert at Prudential, said: “It’s easy to see why many self-employed workers prioritise investing in their businesses over saving into pensions when times are tough.

“The pay-off is much more immediate and the consequences of not saving for retirement can often feel quite distant.

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“But it is a risky approach that could leave many business owners in financial difficulty later in life.”

The research also found 27% of business owners with a pension stopped making contributions during the economic downturn.

Some 8% have since restarted their contributions, but 19% have admitted their contributions are still on hold.

The research has indicated improper retirement planning will leave 29% of entrepreneurs reliant on the state pension.

Russell said: “Saving for retirement – as much as possible, from as early as possible – is important to help maintain a good standard of living after stopping work.

“Business owners who have not made these provisions should seek advice from a financial adviser without delay.”