The government has confirmed that they are to examine a number of different approaches to help encourage the self-employed to save for their retirement. The success of automatic enrolment for pension savings for the employed has helped highlight that pension savings for the self-employed are lagging behind those achieved for the employed. In fact, government research has shown that only around 14% of self-employed people were saving into a pension in 2016-17.
The government has now decided that it is high time to encourage some of the 4.8 million self-employed people across the country to save for various short, medium and long-term financial goals (including retirement). The number of self-employed continues to grow and now makes up around 15% of the UK workforce. These measures are especially important for the many self-employed people that have made no provisions for the future and face reaching old age without the ability to properly support themselves.
Guy Opperman, Minister for Pensions and Financial Inclusion, said:
'We want to see effective, long-lasting solutions that boost the future prospects of millions of hard-working self-employed people, and will work with the financial services sector, professional trade bodies, unions and others to achieve that.'
The government has said that new trials will be launched early this year and will include:
- encouraging employees who become self-employed to keep making regular, affordable, contributions to a pension or other long-term savings product
- better use of financial technology to help the self-employed overcome barriers to saving
- making the most of communication points of contact used by self-employed people - such as online accounting systems - to promote saving for retirement in an easily understood way.
Extending automatic enrolment to the self-employed is not on the current legislative list although it was an election manifesto commitment by the government. Only time will tell if this will be introduced although it is thought a roll-out of automatic enrolment for the self-employed would be a complicated move and may not be an ideal solution.