Personal Pension  

Aviva suggests expanding auto-enrolment to self-employed

Aviva suggests expanding auto-enrolment to self-employed

Aviva has suggested expanding auto-enrolment to include the self-employed.

The launch of Aviva’s review, which coincides with the re-enrolment date for the first businesses to have to auto-enrol staff in a company pension scheme, pre-empts the government’s own review of how the regime is working, due to be conducted in 2017.

Aviva’s “pre-review” will investigate the impact of increasing default contribution rates beyond 8 per cent, and ask how the industry could engage consumers and employers to contribute more than the minimum.

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It will also ask whether auto-enrolment could be expanded to cover the self-employed.

If you are self-employed, you are currently not required by law to enrol yourself into a workplace pension.

Andy Curran, Aviva’s managing director of corporate and business solutions, said: “Most people would agree that auto-enrolment has been a great success in getting more people to start saving for their retirement, and our own research shows that around two thirds of employers and employees agree with AE.

“But we can’t be complacent if we are going to succeed in getting people to save smarter for their retirement. We have to recognise that the amount people are saving is still very low and engagement with pension saving is non-existent for some.”

He said there was a risk some people may assume that, because auto-enrolment is now in place, that the “job is done”, when in fact there is lot left to achieve.

“By carrying out this in-depth pre-review I hope we can take lessons from the story so far to make the future of retirement saving in this country a real success,” he said.

When the government launched auto-enrolment, it prepared for the contingency that few private players would enter the market with the creation of the National Employment Savings Trust (Nest).

However, since then a number of life companies, including Legal & General, Standard Life, Scottish Widows, Zurich and Aviva have sought market share.

Aviva refused to disclose the assets under management or number of members currently using its workplace schemes. But a spokesman said it was continuing to seek market share as small employers reach their staging dates between now and 2018.

Laurence Sanderson, a workplace pensions adviser at Sterling & Law, was sceptical about Aviva’s suggestion of extending auto-enrolment to the self-employed.

“I can’t see how that would work,” he said. “It is a good idea in theory, but how do you make someone who is self-employed automatically enrol? You’d have to make it compulsory. And if you made it compulsory for the self-employed, you’d have to make it compulsory for everyone.”