The Government has confirmed it will publish a long-awaited paper setting out “targeted interventions and partnerships” to boost pension saving amongst the self-employed early next year.
The Department for Business, Energy and Industrial Strategy has today set out its response to the Taylor Review of Modern Working Practices.
The Review made 53 recommendations aimed at improving the rights of self-employed workers in the so-called ‘gig economy’.
The Government has committed to implementing 51 of these recommendations, including tackling the issue of undersaving among some parts of the UK’s growing army of self-employed workers.
Tom Selby, senior analyst at AJ Bell, comments:
“The shift in working patterns away from more traditional forms of employment presents a major retirement savings headache for the Government.
“While automatic enrolment has been successful so far in boosting pension participation among employed staff, around 5 million self-employed workers are not covered by the reforms.
“There are, unfortunately, no easy solutions to this particular challenge. The Government has made clear it will not look to replicate the matched contribution available through auto-enrolment through the tax system, meaning any interventions are likely to focus on ‘nudges’ and improved communications of the benefits of saving.
“The jury is still out on the extent to which a softly softly approach can really drive through a change in behaviour, however. Employed workers have needed more of a shove through auto-enrolment to get saving and it seems unlikely anything less will seriously boost take-up among the self-employed.
“The Lifetime ISA is one product that, with some fairly small tweaks, could be tailored to appeal to this part of the market.
“The key flaws in the LISA at the moment are the age restriction and the overly-harsh early exit penalty. If these were removed it would all of a sudden become a flexible retirement saving alternative with serious appeal for the self-employed.”
