46% of UK business owners have no private pension savings to support them in retirement, according to new independent research from Prudential.

Of those who have failed to make any private pension provision, 54% said this was because they simply could not afford to set money aside. 18% say they don’t have a pension because they will never retire, and 9% claim they have sufficient funds in a company pension from previous employment.

29% of business owners, or 792,000 people, say they will be entirely reliant on the State Pension when they come to retire, compared with just 16% of people across all employment types retiring this year in the UK4.

Other self-employed workers will supplement their retirement incomes with money from a mix of alternative sources: 48% will draw on other savings and investments, 25% will use equity from their properties, 25% plan to use their partners’ pensions, and 19% plan to use funds from the eventual sale of their businesses.

Prudential asked those business owners who don’t have a pension whether they plan to start one in the future and the majority of respondents 63% said no. Only 13% said they were planning to start a pension and just under a quarter 24% were undecided.

Stan Russell, retirement specialist 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.

“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.

“Pensions offer huge tax advantages and business owners who have not made any retirement provision should seek advice from a financial adviser without delay about the best way to save for their futures.”

Saving into a pension has become a lower priority for those business owners who do have some dedicated retirement savings. The survey found that more than a quarter 27% of entrepreneurs with pension savings had put their personal contributions on hold since the start of the economic downturn.

Prudential’s study also highlights a significant gender divide among business owners when it comes to saving for retirement, with 59% of women saying they have no pension, compared with 37% of men.