The number of self-employed women has rocketed by nearly a quarter in just four years to 1.5m. That’s double the rate of increase for male self-employment over the same period.
But analysis from Prudential reveals women working for themselves are less likely to contribute to a pension with just one in eight putting money aside for retirement. This compares with the 59% of employed women who pay into schemes offered by their employers.
In comparison, 17% of self-employed men pay into a pension, while 60% of employed men contribute to their employer’s scheme.
Prudential said the low rates of pension contributions among self-employed women could be partly due to the simple fact that they earn less than their male peers.
Latest figures for the 2014/15 tax year show the median annual income for self-employed women was £8,435 compared with £15,350 for self-employed men.
Just over half (53%) of self-employed women work part-time compared with only 18% of self-employed men during the same period.
The provider said the gender gap has been closing since 2008. But women retiring in 2016 can still expect an income on average £5,400 a year lower than that of this year’s male retirees.
Kirsty Anderson, a retirement income expert at Prudential, said: “There is a risk that the increase in self-employed women will undo some of the progress in shrinking the retirement income gender gap that we have seen in recent years. When becoming self-employed, pension contributions can easily slip down the priority list. But it is important to remember that one of the main reasons for lower average retirement incomes among women is the periodic gaps in their pension contributions.
“While auto-enrolment is encouraging increasing numbers of employees of companies to save into a pension, those choosing the flexibility that many self-employed people enjoy, are giving up benefits such as employer contributions into company pension schemes.
“Pension saving is for the long term and the earlier anyone starts saving, the longer their retirement fund has to grow. For most people, and especially those who are self-employed, a consultation with a professional financial adviser will help them to put a plan in place to save regularly for as comfortable a retirement as possible.”