Pensions  

Nest to trial self-employed saving solutions

Nest to trial self-employed saving solutions

Government-backed workplace pension scheme National Employment Savings Trust (Nest) will start testing savings solutions for the self-employed in the next two years.

These trials, which will be conducted by the provider's research unit Nest Insight, could include incentivising people towards near-term targets through points or rewards, the use of apps that let self-employed people save as they spend, or partnerships with platforms already used by workers.

Will Sandbrook, executive director of Nest Insight, told FTAdviser these trials, which will be developed over the next two years with self-employed members of the scheme, are the result of research conducted by the provider and I2 Media Research.

But he warned the evidence suggested that among a diverse group like the self-employed, and without an employer to manage enrolment and contributions, it was unlikely a single solution would reach the whole population and be suitable for everyone.

The number of self-employed people has increased rapidly in the UK in recent years, growing from 12 per cent of the labour force in 2001 to 15 per cent in 2017.

Meanwhile data from the Department for Work and Pensions (DWP) showed the number of self-employed workers saving into a pension through auto-enrolment had dropped from 19 per cent in 2012/13 to 16 per cent in 2016/17.

Mr Sandbrook said: "Over the next couple of years, we’re keen to work closely with the pensions industry, academics and government to develop a range of savings propositions and test what works.

"We believe there are a number of solutions that have the potential to make a very noticeable and positive impact on long-term saving amongst the self-employed."

He said one of the solutions which could be more easily tested was the partnership with platforms.

Mr Sandbrook said: "Auto-enrolment works well in part because of payroll deduction, and the fact that the savings behaviour of making regular contributions gets pushed into the background.

"One of the aspects we've been trying to think about with the self-employed is what are the various different ways in which they get paid, and to what extent can you mimic some of the characteristics of payroll deduction but in a self-employed context.

"That might include online invoicing software, or getting paid through payment platforms like PayPal. There might be ways where you can offer these people opportunities to divert a bit of the income they get into a savings account or a pension."

The DWP announced it would work on improving pension participation and retirement outcomes among self-employed people by testing a number of different approaches in its auto-enrolment review in December.

However, these trials, which were supposed to start this year, are believed to be facing delays.

Nest has more than 7,000 self-employed members, who will be part of the provider’s trials.

Mr Sandbrook said: "We are keen to try anything that the research suggests that will be helpful.

"Obviously, some solutions are easier to develop research trials around than others, and depends a lot on which partners you can find that are willing to work with you on that.