Some ‘super contributor’ entrepreneurs putting over £300,000 into pensions
Around 1,000 self-employed workers contributed six-figure sums into personal pension pots in the tax year 2023-24, according to HM Revenue and Customs (HMRC) figures.
Among the top 25 entrepreneurs contributing into personal pensions in 2023-24, the average sum put in over the year was £304,400, according to HMRC’s response to a freedom of information (FOI) request from money app Plum.
HMRC’s self-employed figures are derived from self-assessment tax returns.
Plum said that the “super contributors” into pensions were still outliers, with a relatively small number of self-employed people making six-figure contributions.
According to the data released to Plum by the revenue body for the tax year 2023-24, around 600 self-employed people had contributions into personal pension schemes of £100,000 to £124,999, 300 were behind contributions of £125,000 to £149,999, 100 were behind sums of £150,000 to £174,999 and 100 people contributed £175,000 or more.
Figures were rounded to the nearest 100 and self-employed people who did not make any pension contributions during the period were excluded from the analysis.
The average annual pension contribution by self-employed people who made pension contributions in 2023-24 was £7,700, according to HMRC’s records.
Some 90,100 self-employed people who made contributions into personal pension schemes in 2023-24 paid in £999 or less, according the HMRC figures, which show gross contributions.
The figures also indicated that many self-employed people were not actively saving for later life through a personal pension, with millions of people across the UK being self-employed.
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Rajan Lakhani from Plum said: “For salaried employees, auto-enrolment provides a great foundation for their retirement planning.
“However, for the self-employed, the responsibility falls on them to organise their own pensions.
“Because the self-employed face constant unpredictability over when they will be paid, this makes it harder to plan for retirement.
“And while it’s amazing that some managed to lump £300,000-plus into their pots in a single year, these super contributors are very much the exception to the rule.”
He suggested that needing cash in the bank or having plans to sell the business one day may be behind some people’s reasons for not saving into a pension, but he added: “Businesses are not always easy to sell, regardless of performance.
“Structural changes in the economy, family issues or sudden shifts in demand mean that many businesses end up failing despite earlier successes.”
Plum’s director of wealth strategy Will Bryant said: “Increasing your contributions incrementally, or making top-ups when you have spare cash, can help you avoid a pension shortfall later on and give you a more comfortable lifestyle when you do retire.”
On Tuesday, the Pensions Commission said self‑employed people are among the groups of people who could be particularly at risk of under-saving for their retirement.
It said that just 4% (one in 25) of wholly self-employed workers are saving for retirement.
The report said: “Given there is no automatic enrolment for the approximately four million self-employed workers in the UK, the inertia-based pension-saving system does not provide for many who need it most.”
The commission’s interim report on the state of retirement saving in the UK warned that significant groups of people could face a severe cliff-edge when they retire, with women, low and middle earners and people with disabilities also among those at particular risk.
It said around 15 million people are thought to be under-saving for their retirement.
The commission said that a fresh “national settlement” for pensions is needed, and a final report from the commission with recommendations will follow in early 2027.
