Personal Pension  

Advisers on the front line for self-employed pensions

Advisers on the front line for self-employed pensions

Financial advisers have a major role to play in getting the self-employed market saving for a pension, the National Employment Savings Trust has said, with recent statistics showing just a third of self-employed people are currently saving into a pension.

The self-employed market clearly fall outside auto-enrolment and therefore two thirds are simply not saving for a pension. At present, Nest has over 2m members altogether, although only a little more than a thousand are self-employed individuals.

Helen Dean, executive director for product and marketing at Nest, told FTAdviser: “We’d hope to see the number of self-employed Nest members continue to grow.

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“We’ve already got more than 2m members overall. That means a lot of people out there have now heard of Nest and all the signs are that they like being with us.

“Consumers across the board seem to be embracing pension saving so hopefully that wider cultural shift will lead to higher pension saving rates among self-employed workers too.”

Ms Dean added that financial advisers could have a role to play. “Only a third of self-employed people are currently saving in a pension so there’s a lot of potential in helping more get on board.”

She emphasised that Nest has tools to support self-employed workers, but did not point to any specific marketing the organisation is undertaking to raise awareness in the self-employed sector.

Ms Dean said its website is accessible, with a section to dedicated self-employed workers where they can find out more, adding that personal finance journalists regularly extol the virtues of pension saving for self-employed workers and have signposted Nest as a good option.

“As a scheme Nest offers a range of fund choices that can be clearly communicated and understood. The fact we offer nearly 50 single-year target date funds as our default provides each member with a fund that’s risk managed for the year they retire whether that’s in ten years or 40.

“We believe the investment approach Nest offers all of its members, including those who are self-employed, represents high quality at good value. This may be particularly true for self-employed members who have traditionally been offered stakeholder pensions.”

Previously Tim Jones, Nest chief executive, told FTAdviser that while it would be “clearly technically possible” to auto-enrol the self-employed, it is questionable whether a politician would dare to say, ‘I am going to force you to spend your own income on this but the good news is you can opt out’.

Arnold Ayton, platforms and partnership manager at Genlife, added that in the current auto-enrolment system there is a “separation” between the party under obligation (employer) and those being enrolled and saving (employee).

“For this to truly work for the self-employed, we must be pragmatic as there is not an existing real time compliance procedure such as the PAYE system for auto-enrolment of the self-employed to link to.

“This is important, as such an arrangement requires infrastructure in order to facilitate the regular payment of contributions on behalf of these individuals.”