The government is ready to see its costs increase when a solution is found to auto-enrol self-employed workers, said Jamie Jenkins.
The head of pensions strategy at Standard Life, and chairman of the Department of Work and Pensions (DWP) external advisory group supporting the government’s auto-enrolment review, told FTAdviser there is "no cost-free option" in this matter.
He said: "The government is open on ideas on how to get self-employed saving, and that will increase tax relief."
Matthew Taylor, a former Labour adviser and author of the government's review of working practices in the modern economy, said this week that the government won’t be making changes to the self-employed auto-enrolment soon, as it is too expensive.
But Mr Jenkins said Mr Taylor only included one model for auto-enrolling self-employed people in his review, which had significant costs.
This was a solution for auto-enrolling self-employed people into a pension through the self-assessment tax process and providers Aviva and Royal London suggested a similar idea, including the chance for the self-employed to opt out of the contributions.
Mr Jenkins said: “There is a range of ideas on how to encourage self-employed into saving, this was just one of them.”
The external advisory group is working on cost estimates for the solutions on the table, he said, adding that no decision has been made at this point.
Mr Jenkins said setting up a solution to deal with the issue of this type of worker failing to set cash aside for retirement is one of the main priorities of the review.
He said: “There is a consent that we need to do something for this group – one in seven workers in the UK is self-employed.”
But he added there was "little consent" on what to do within the external group.
The DWP announced last year a review of auto-enrolment, five years after its launch. The report, with final recommendations, will be published by the end of the year.
Pensions minister Guy Opperman recently confessed “there is no simple solution” for including self-employed people in auto-enrolment.
According to Nathan Long, senior pension analyst at Hargreaves Lansdown, some movement in this area is expected, given the Conservative party pledge to “include the self-employed in saving for retirement within their manifesto”.
He said: “The perilous pension position of the self-employed is becoming so acute, that the government may well have no choice but to act and absorb the increased amount spent on tax relief.
“We cannot expect this to be pain free for pension savers, further salami slicing of allowances is almost inevitable to try and contain some of this cost.”
maria.espadinha@ft.com
