A government study will explore the possibility of auto-enrolment into pensions for gig economy workers
While the recent Budget was free of seismic change in relation to pensions, the government made a very significant statement of intent regarding retirement planning for the self-employed.
It would, the chancellor’s statement revealed, launch a public consultation over plans to encourage more self-employed workers into pensions.
“The government will publish a consultation as part of its response to Matthew Taylor’s review of modern working practices, considering options for reform to make the employment status tests for both employment rights and tax clearer,” the statement said.
“The government recognises that this is an important and complex issue, and so will work with stakeholders to ensure that any potential changes are considered carefully.”
The consultation, expected to begin imminently, will be overseen jointly by HM Treasury, HM Revenue & Customs and the Department for Business, Energy and Industrial Strategy.
The Taylor Review of Modern Working Practices had supported the view that self-employed people could effectively be auto-enrolled into a pension via the tax self-assessment process.
In mid November a report by the Pensions Policy Institute estimated that some five million gig economy workers do not have access to a workplace pension.
The report claimed that such self-employed workers could boost the size of their retirement savings by up to £75,000 if some form of auto-enrolment was rolled out to cover all workers.
Recent research by Now Pensions, meanwhile, stated that workers in the gig economy could be losing out on £182million in potential employer contributions every year.
Scottish Widows’ Head of Policy, Pete Glancy welcomed the announcement:
“We want to make saving for the future as inclusive as possible. This requires a framework that makes saving easy and attractive for the self-employed. There’s a lot that can be learned from automatic enrolment, which has proven to be a very effective policy by making saving the default option.”