He argues government cannot ‘copy-and-paste’ auto-enrolment legislation for the self-employed and urges the next government to explore creative policy solutions.
The manifesto states ‘…we will continue to support the successful expansion of auto-enrolled pensions, enabling more people to increase their retirement income with help from their employers and government; we will continue to extend auto-enrolment to small employers and make it available to the self-employed…’
Old Mutual Wealth head of retirement policy, Jon Greer says:
“The self-employed appear to be massively under-saving in pensions for their retirement. Recent data show they save far less on average into pensions*, and without Government intervention this is unlikely to change. But a copy-and-paste approach cannot be used to extend auto-enrolment to the self-employed.
“Auto-enrolment works around the infrastructure of the workplace and more creative solutions will be required for the self-employed. The next government will need to look at various options for example, using the national insurance system, or perhaps taking advantage of new opportunities in the planned digital tax system.
“The next government should look to address the pension savings gap of the self-employed. Outside auto-enrolment, they miss out on savings perks like pension tax relief and also an employer contribution that boost the savings of ordinary employees. As a result they risk being worse off in retirement than their peers that have worked for an employer.
“Auto-enrolment in its current form cannot be easily extended to the self-employed. Under auto-enrolment, the employer selects from a range of schemes that meets certain standards, pension providers run savings plans that do not require individuals to make their own decisions, and the valuable tax-relief and employer contributions is automatically added in to the money workers pay-in. This workplace infrastructure doesn’t exist for the self-employed so an alternative solution will be necessary.”