MILLIONS of self-employed people risk heading for old age stricken by poverty unless stronger action is taken to help Britain’s “forgotten army” of workers, a report by former pensions minister Steve Webb warns.

The report raises fears for Britain’s 4.4 million-strong army of self-employed people, who account for around one in seven members of the working population. It states that action needs to be taken urgently if a major problem for the sector is to be averted.

Pension saving among this sector is now at “crisis levels”, said Mr Webb, who is now director of policy at Royal London, which published the report.

People employed in the sector need to take action urgently to ensure they do not find themselves struggling to make ends meet during their autumn years

Self-employed people are generally not included in the drive to get people saving into a workplace pension under automatic enrolment, which means they are becoming increasingly vulnerable to not having enough in the bank to compensate when they are no longer working.

Automatic enrolment into workplace pensions started in 2012 to help head off fears of an old age savings crisis and so far more than six million people have been placed into a pension.

The scheme has been seen as a success in getting people into the savings habit, with around nine in ten people staying in their workplace pension until they get to the stage when they either want or have to retire.

Mr Webb said: “Self-employed people are missing out on the surge in pension scheme coverage among employed earners.

“Whilst the number of self-employed people is growing, their membership of pension schemes has collapsed and is now at crisis levels. It is time for action to be taken to avert any potential crisis.”

Mr Webb continued: “Without action, millions of self-employed people could face poverty in old age – and that is not something anyone wants to have to contemplate – it is vital to be fully prepared for when retirement comes round.”

The report, which is entitled Britain’s Forgotten Army, said that while some self-employed people may benefit from recent changes to the state pension, action is needed to tackle the “large and growing problem” of declining private pension provision among the self-employed.

The report pointed to government estimates showing in the mid-1990s nearly two-thirds (62 per cent) of self-employed men were members of a pension scheme, but by 2012 this proportion had fallen to less than one quarter (22 per cent) and it is a trend which urgently needs to be reversed before it is too late.

Mr Webb also highlighted Office for National Statistics (ONS) figures showing the numbers of self-employed people have been growing between 2008 and 2013 across the whole of Britain, which means the issue will inevitably become bigger. Mike Cherry, national chairman of the Federation of Small Businesses (FSB) said the report makes a “valuable contribution”, adding: “This is a subject which needs much greater thought and attention.”