Since last year’s snap election and the subsequent scramble of policy promises, the Tory party has been accused of flip-flopping, u-turning and reneging on several of their political promises. While that is certainly not something to boast about, what is worthy of merit is reflection on whether policy promises are practical and in the best interest of the public.
Among the Tory’s promises was a pledge to extend auto-enrolment to the self-employed in their manifesto. However, following a considered review and reflection it is apparent that promise was made without all the facts. For instance, the lack of pension saving of the self-employed is not necessarily due to apathy, it is because they fundamentally have a different approach to savings. For instance, many people who are self-employed regardless of their salary have to grapple with a lack of certainty and security of their income month to month. This can make the idea of committing money into a pension pot that can’t be accessed for years to come seem like a potentially risky decision.
A ‘sidecar’, which is a pool of money made accessible at any age in times of need could provide a flexible approach for a group that desires flexibility. This is just one of the trials being explored for employees by NEST insight. However, it could equally be targeted at the self-employed and it is that kind of innovation that will ensure that they are given the best possible chance of prosperity in retirement.
Auto-enrolment for the self-employed may not have been within the Government’s grasp as there is no employer to do the ‘enrolling’. Had the auto-enrolment criteria been overlaid on the self-employed it would have captured about 2 million* of the over 4.8 million strong population. So it is not only positive, it is vital that the government explore every possible avenue to bring the self-employed into pension savings.
*Policies for increasing long term saving of the self-employed, conducted by the Pension Policy Institute on behalf of Old Mutual Wealth