Govt confirms deadline for self-employed pensions paper

Govt confirms deadline for self-employed pensions paper

The government has confirmed that it will publish a paper setting out its approach to increasing pension participation among the self-employed this winter.

In its response to the Taylor Review of Modern Working Practices, the Department for Business, Energy and Industrial Strategy (BEIS) stated the consultation, first announced in October, would be published in due course.

It follows the 2017 review of automatic enrolment and will focus on "expanding evidence through a programme of targeted interventions and partnerships", the government stated.

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The Taylor Review, authored by former Labour adviser Matthew Taylor, made 53 recommendations aimed at improving the rights of self-employed workers in the so-called ‘gig economy’.

The government has committed to implementing 51 of these recommendations, such as closing a loophole that had allowed agency staff to be paid less than permanent employees, introducing new calculations for holiday pay and increasing the maximum fine employers face at a tribunal from £5,000 to £20,000.

On pensions, Mr Taylor concluded that effectively auto-enrolling self-employed people into a pension through the self-assessment tax process would help these workers set aside funds for their retirement.

The government has not formally committed to this recommendation but will explore the topic in its upcoming paper.

According to Tom Selby, senior analyst at AJ Bell, the shift in working patterns away from more traditional forms of employment presented "a major retirement savings headache for the government".

He said: "While automatic enrolment has been successful so far in boosting pension participation among employed staff, around 5 million self-employed workers are not covered by the reforms.

"There are, unfortunately, no easy solutions to this particular challenge."

Mr Selby added "the jury is still out on the extent to which a softly approach can really drive through a change in behaviour".

He said: "Employed workers have needed more of a shove through auto-enrolment to get saving and it seems unlikely anything less will seriously boost take-up among the self-employed.

"The Lifetime Isa is one product that, with some fairly small tweaks, could be tailored to appeal to this part of the market.

"The key flaws in the Lisa at the moment are the age restriction and the overly-harsh early exit penalty. If these were removed it would all of a sudden become a flexible retirement saving alternative with serious appeal for the self-employed."