"When self-employed women do save adequately, they actually put more of their income aside than anyone else"
Additionally, less than half of self-employed women (46%) save the minimum recommended level, compared to 56% of women who are employed by a company.
However, the 46% who are saving at least the minimum adequate level are among the best savers in the country. Their average savings rate of 16% of income is higher than that of self-employed men (14%) and is even higher than the average for both employed men and women (12% and 10%).
Since 2007-2008, the average savings rate for self-employed women who do save has grown 5.2%, significantly exceeding the rate amongst women working for an employer (3.6%).
Business earnings of female entrepreneurs see wide variation, which may explain the polarisation in savings. Four out of five self-employed women (80%) who save inadequately earn below £20,000 a year.
Age and career stages also contribute to the challenges faced by female entrepreneurs: women currently in their thirties are playing catch-up when it comes to saving, having missed out on auto-enrolment at the beginning of their career. Women in their thirties who have moved from being an employee in their twenties, to being self-employed today, will have missed out on auto-enrolment at both stages.
Jackie Leiper, pensions director at Scottish Widows, said: “A growing number of women are taking charge of their careers by launching their own businesses or working as freelancers – 700,000 have set up on their own since 2005, and 1.7 million women are now self-employed.
“This raises real concerns when we consider that women are historically under-prepared for retirement and that self-employed women do not benefit from the safety net of auto-enrolment, which has helped boost female employees’ savings since its introduction.
“The good news is that when self-employed women do save adequately, they actually put more of their income aside than anyone else – but the proportion of female entrepreneurs saving at all has not grown in the past decade. It’s clear that reform is needed to drive a step-change in retirement preparations for the self-employed, in the same way that auto-enrolment has for employees in the workplace.”
Anna Lane, founder and CEO of The Wisdom Council, a majority female-owned and run business operating in financial services, added: “Ambition is a major theme that shines through from the women I work with and this is reflected in the increasing number of female entrepreneurs. There is a disconnect however with their aspirations and how it will be realised financially, with few having even considered anything other than personal savings to start their own business.
“30% of businesses fail in the first two years and so this risk paired with the risk of not putting money aside for the future is a double-edged sword often faced by female entrepreneurs. In fact, many women I talk to see their business as their retirement fund.
“We need to see more flexibility and innovation in long-term savings propositions that acknowledge the different earning patterns of the self-employed. We must recognise that this group is often more focused on annual tax returns as a point when income is known for the year and be open to reviewing other tax incentives to encourage saving.”
