The self-employed should be auto-enrolled in a private pension scheme through the taxation system, in a move that would prevent the "next pension crisis", Hargreaves Lansdown has said.
Currently the auto-enrolment system - which automatically puts all employees of a business, regardless of size, into a workplace pension - does not include the UK's 4.76m-and-rising self-employed workers.
Hargreaves Lansdown's head of retirement policy Tom McPhail said the lack of provision for this group was a major concern.
“The self-employed are a rapidly growing segment of the economy, yet savings policy has completely left them behind. Most of them aren’t saving in pensions and most of them aren’t eligible for the forthcoming Lifetime Isa," he said.
He said the government could not "ignore this developing crisis any longer", and recommended that the needs of the self-employed figure prominently in next year's auto-enrolment review.
Hargreaves Lansdown proposed three solutions. The first was to force the self-employed to contribute to a pension scheme - they recommended Nest - via the tax system, only giving them the chance to opt-out once they been enrolled.
The second two solutions would impact both the employed and the self-employed.
One was to reform pension tax relief to make it 100 per cent minus the individual's age. That would mean a 30-year-old would receive £7 of tax relief for every £10 they contributed, while a 50-year-old would receive £5.
Hargreaves Lansdown recommended this policy in September. Labour MP and Work and Pensions Select Committee members Steven McCabe put forward a similar policy shortly afterwards.
Finally, the firm recommended giving people a choice over which pension scheme their auto-enrolment contributions were paid into.
While the government has marketed the Lifetime Isa, due to launch in April 2017, as a product that will benefit the self-employed, Mr McPhail pointed out that, given it is only open to the under-40s, most self-employed people would not qualify.
However, he did not propose lifting the age restriction on the Lisa.
"Doing this would add billions to the cost of the policy, would substantially undermine pension provision and would create an even more confusing savings landscape than already exists today," he said.
james.fernyhough@ft.com
