Almost half of Britain's self-employed workers have no pension savings and they will miss out on the Government's new auto-enrolment scheme.
While all employees will be automatically enrolled in a company pension under a new scheme that began this week, self-employed workers are not included.
About a fifth of people who run their own business intend to use the funds from its eventual sale to support their retirement, while a similar number say they will never retire. But almost 30pc say they will be entirely reliant on the state pension when they stop working.
Of those who have failed to make any private pension provision, 54pc said they simply could not afford to set money aside.
Stan Russell, a 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 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 said the state pension should be seen as a "safety net", not a default source of income.
Mr Russell added: "Pensions offer huge tax advantages and business owners who have not made any retirement provision should seek advice from a financial adviser about the best way to save for their futures."
John Fletcher of Brewin Dolphin Investment Management said: “Many business owners will feel that ensuring the survival and growth of their business is more of a priority than saving for their own retirement. They will also be hoping that if they can make the business a success it will provide an alternative pension.
"This could prove to be a risky strategy, and for those who can make pension contributions there are very clear tax and diversification advantages”.