Millions of people with side hustles are being warned they could miss out on up to £154,000 in retirement savings if they fail to put aside earnings from their extra work. According to new research from PensionBee, 49 per cent of people now have a side hustle, yet only five per cent save any of that income into a pension.
The Scale of the Side Hustle Economy
The study found that 12 per cent of people have had a side hustle at some point in the last two years. For 81 per cent of those currently earning from a side hustle, the income is relatively modest at less than £500 a month. However, even small contributions could make a significant difference over time.
PensionBee's analysis shows that consistently saving side hustle earnings into a pension throughout a working life could boost a retirement pot by up to £154,000. The firm warns that failing to do so represents a “costly misconception” for many workers.
Retirement Readiness at Risk
The research also reveals that only nine per cent of working-age Britons are on track for a comfortable retirement based on current Auto-Enrolment minimums. Among side hustlers, 22 per cent said they cannot afford to put their extra earnings into a pension because the money goes towards essential expenses. A further 20 per cent cited unpredictable income as a barrier to committing to regular pension contributions.
Expert Insight on Missed Opportunities
Maike Currie, Vice President of Personal Finance at PensionBee, said: “For millions of people, a side hustle has become a lifeline against the rising cost of living, but the extra income is too often swallowed up by day-to-day spending or held in places that won't deliver the long-term growth a pension can. This is a missed opportunity for building much-needed retirement wealth.”
She added: “The reality is that Auto-Enrolment minimums are not enough to fund a comfortable retirement while millions of 'invisible' workers - including carers and the self-employed - are excluded from the system altogether.”
Calls for Pension Reform
PensionBee is calling for reforms to the pension system to better reflect modern working patterns. The firm advocates expanding Auto-Enrolment to cover lower earners and using Self-Assessment tax returns to encourage the self-employed to start saving.
Currie concluded: “In the meantime, anyone with a side hustle should take control today by opening a personal pension and making the most of the valuable government top up in the form of tax relief available on contributions. Even modest amounts redirected each month can compound into substantial sums by the time you stop working.”
