24 BUSINESS WOMEN SCOTLAND business advice
Thousands of
‘mumpreneurs’ face
poverty in retirement
It has recently been reported that only one in 5 ‘mumpreneurs’ are saving into a
pension pot. Thousands of ‘mumpreneurs’ are facing poverty in retirement because
they are failing to pay into a pension, a think tank has warned.
Official analysis shows just a fifth of self-employed
women paid into a pension in 2013, down from a
quarter in the six years earlier.
A recent rise in mumpreneurs, stay-at-home mothers,
setting up their own business in search of flexible work,
meant this problem had taken on a new urgency, with
growing numbers of women facing inadequate savings
in retirement, experts claimed.
Mumpreneurs are particularly vulnerable because
their start-up may not be turning a large enough profit to
plough cash into a pension.
Conor D’Arcy, at the Resolution Foundation said: “The
rapid rise of ‘mumpreneurs’ has been one of the most
eye-catching trends since the downturn. But this shift
has not been without its problems – the self-employed
have experienced an even deeper pay squeeze than
employees. Many have enjoyed the flexibility that often
comes with being your own boss and want to continue.
But, as self-employment becomes a longer-term career
choice, it’s essential that the 4.5million Britons who work
for themselves are saving for their retirement.”
Only one in 5 ‘mumpreneurs’ are saving into a
pension pot: Thousands who run fledgling businesses
are facing poverty when they retire, warns think-tank.
The number of self-employed workers has soared by
almost 700,000 since 2008. Mumpreneurs may face
poverty in old age by failing to pay into a pension.
The number of self-employed women making
contributions fell from 26 to 19%. In the same six year
period the proportion of men paying in fell from 36 to 31%.
The Resolution Foundation warned that the
increasing trend of ‘mumpreneurs’ had left thousands
more at risk of pension poverty. Since 2008, the
number of self-employed workers has risen by almost
700,000 from 3.8million to 4.5million. One in seven
people in employment now work for themselves,
compared to one in eight before the recession.
The Bank of England said recently this rise was
being driven by mothers seeking more flexible
careers and trying to maintain a ‘work-family
balance’. But with female businesswomen far less
likely to save into a pension than men, the trend
posed a new dilemma. Mr D’Arcy said: “
Just one in
five self-employed women currently has an active
pension scheme. Without further saving, many could
be left to rely on little more than the state pension to
support them in their later years.” The Foundation
said the self-employed were more likely to prefer
other forms of savings, such as ISAs.
For those who hired employees, most expected
their company profits or the sale of the firm to form
the largest part of their retirement income, studies
showed. But the think tank said ‘these extra forms of
income are unlikely to be enough to compensate for
the shortfall in pension saving’.
They said the Government’s auto-enrolment
scheme, where employees are automatically
registered into their workplace pension, had
successfully helped many workers, but failed to
address the self-employed. They said the Government
must look at ways to ‘encourage pension saving
among the UK’s self-employed workforce’. n