“It was revealed by the Government in its Good Work plan published today that in the winter of 2018 the DWP is planning to publish a paper exploring how to increase the pension participation of the self-employed.
“This step is not only welcomed but badly needed as the self-employed currently slip through the cracks of auto-enrolment and there is still no clear strategy to make sure that this group of people put enough away to fund their retirement.
“The Taylor Review, commissioned by the Government and published in 2017, suggested that the self-employed should be automatically enrolled into a pension, paying 4 per cent of income into a product unless they choose to opt out. While any solution tabled is a good stride forward, we need to think carefully about the nuances of this approach.
“For example one of the biggest problems that the self-employed have to contend with is a lack of certainty and security of their income month to month. Therefore, particularly for those with lower and moderate incomes, the idea of committing money into a pension pot that can’t be accessed for years to come could seem very unpalatable and therefore avoided. To make pensions more appropriate for the self-employed, a pension ‘sidecar’ should be explored, a pool of money made accessible at any age in times of need – something that NEST is in the process of trialing.
“However, whatever solutions the Government put forward in this winter paper they need to avoid a ‘one size fits all’ approach to pension saving for the self-employed as they are unique group of workers with vastly differing needs.”