6 June 2019
Hair and beauty salon owners without private pensions say they will delay their retirement for as long as possible, an NHF/NBF survey has found.
Of 400 salon owners surveyed, almost one in six (16%) said their State Pension would be their only pension income during retirement. Half of those said they would delay their retirement for as long as possible.
Hilary Hall, NHF/NBF chief executive said: “Many salon owners report they simply can’t afford to pay into a pension scheme, even if they are making contributions for their employees.”
Self-employed pension time bomb?
Most salon owners are self-employed as sole traders or running limited companies. The number of self-employed stylists, barbers and beauty therapists is also increasing and this group is unlikely to have made any plans for their pensions, especially if they’re young.
“Research shows that unless the self-employed start saving early for retirement there will be no choice but to carry on working well into old age or face the bleak prospect of living in poverty when they can no longer work,” says Hilary.
Analysis by investment company AJ Bell found that ten years ago, just over a quarter of the self-employed (27%) paid into a pension; this fell to 15% in 2017/18.
And a recent study by investment firm Fidelity revealed that two-thirds of self-employed 23-38-year-olds do not have any form of pension.
Pensions, property and sale proceeds
The NHF/NBF survey found that just a quarter of salon owners are paying into a pension scheme, either the same one as their employees (10%) or a different one (16%). A few (11%) had previously paid into a pension so could expect a small payment at retirement.
“The rest have savings towards retirement (8%), property they could sell or rent out (12%), or are hoping to sell their business and retire on the proceeds (10%),” says Hilary.
“However, many of those with a pension still intend to delay retirement and carry on earning while they can, rather than depend on a pension.”
Salon employees stay in auto-enrolment schemes
Two thirds of salon owners taking part in the NHF/NBF survey said most employees are staying in their auto-enrolment pension schemes - despite increasing costs for employees as well as employers.
New figures published by the Department for Work & Pensions show that 87% of eligible workers contributed to a workplace pension in 2018, up from 84% in the previous year.
… but most workers not saving enough
The AJ Bell analysis shows that most workers are still not saving enough for retirement. For example, a 25-year-old earning £30,000 a year who is paying the minimum 8% contribution could expect a pension of just £7,000 a year when they reach retirement age, well below what most people would expect to live on.