Almost half of UK business owners have no private pension savings to support them in retirement, according to research published by Prudential today.
A survey carried out on the firm's behalf found that 46% of business owners had no pension savings. More than half (54%) of these said this was because they could not afford to set money aside, while 18% said it was because they would never retire. A further 9% claimed they had sufficient funds in a company pension from previous employment.
Nearly one in three (29%) business owners told the survey they would be entirely reliant on the state pension when the retire, compared with 16% of people across all employment types retiring this year in the UK. This equates to 792,000 UK residents.
Other self-employed workers included in the survey said they would supplement their retirement incomes with money from a range of other sources. Nearly half (48%) plan to draw on savings and investments, 25% will use their partners' pensions and almost one in five (19%) will use funds from the eventual sale of their businesses.
Stan Russell, retirement expert at Prudential, said: 'It's sometimes hard for self-employed workers to distinguish between their business and personal finances. Often, investing in the business takes priority over saving for retirement - an issue that is particularly prevalent now, given the tough economic conditions facing UK businesses.
'Unfortunately, the long-term implications of not saving for retirement are that many retirees will have a real income shock and reduced living standards when they finally retire. And while a number of business owners say they don't need a pension because they'll never stop working, this optimistic approach won't always be realistic - for example because of health issues later in life.'
He added: 'Although some business owners plan to supplement their retirement incomes with alternative sources of finances, a large proportion will be entirely reliant upon the State Pension - which should actually be a safety net, not a default source of income.'
Among business owners without a pension, 63% said they don't plan to start one in the future, 13% said they did and 24% were undecided.
At the same time, the survey found that 27% of business owners who do have pension savings had put their personal contributions on hold since the start of the economic downturn.