PensionsMay 9 2019

Fragmented working lives could disrupt pension saving

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Fragmented working lives could disrupt pension saving

Work and pensions secretary Amber Rudd has called on the government to focus on helping people move to higher paid and higher skilled roles as the market readies itself for an increasing number of automated jobs.

In a speech at the Recruitment and Employment Confederation today (May 9), Ms Rudd warned that multiple job changes are likely to become the norm, as automation takes on more banal tasks. 

But industry experts warned this could lead to disruption in people's later live provision.

Ms Rudd said: "The jobs of the future are increasingly likely to be those that need human sensibilities: with personal relationships, qualitative judgement and creativity coming to the fore.

"And there is a clear role for government to help people take advantages of these changes, and to help businesses create high-quality jobs. I don’t underestimate the challenges ahead. Jobs are being made, remade and reshaped every day, as we find new ways to be useful to one another."

As part of her speech, Ms Rudd announced two projects for job centres, which included building the ability to help claimants make good decisions about job switching and boosting the capability of the Department for Work and Pensions (DWP) employer-facing staff to have effective conversations with local employers. 

She added: "We want every person, no matter their background, to progress in the workplace and outperform what society says they should be able to do. These values are at the heart of what I will do at the DWP."

But Steve Webb, director of policy at Royal London, said such constant job changes could result in a disruption of pension savings among employees. 

He said: "There is no doubt that growing numbers of workers, and especially those in the ‘gig’ economy will have much more fragmented working lives than previous generations.  

"Until there is an easy way for people to consolidate pensions this makes it all the more important that progress is made with the pensions dashboard so that workers can at least see all of their pensions in one place."

In July 2017 the government was presented with the Taylor Review of Modern Working Practices, which was described as the "biggest shakeup in employment rights in a generation" but was widely criticised for its lack of focus on pensions. 

The review concentrated on the gig economy and workers rights, recommending stricter enforcement on holiday and sick pay rights, and higher fines for companies that mistreat employees - most of which the government accepted.

But following today’s comments, Rachel Reeves MP, chair of the Business, Energy and Industrial Strategy Committee, said the government has again failed in its promise to bring forward an employment bill that would create a fair working environment. 

She said: "Almost two years since the Prime Minister launched the Taylor Review and over a year on from the government accepting most of its recommendations, the government has failed to bring forward the promised employment bill needed to match the Prime Minister’s commitment to ‘a country that truly works for everyone’. 

"While the government dawdles, it is left to the courts to find in favour of people’s basic employment rights, leaving vast numbers of people in insecure work without the rights many of us take for granted: sick pay, holiday pay, and certainty that they will earn at least the minimum wage."

Ms Reeves added: "The government must stop dragging its feet and come forward with the legislation needed to protect workers’ rights and end the abuse by unscrupulous employers."

Now: Pensions estimated in 2017 that workers in the gig economy could be missing out on £182m of employer pensions contributions annually.

The workplace pension provider calculated this value by considering the auto-enrolment 3 per cent rate that became the minimum for companies to pay into their employed workers pensions by April 2019.

Since 2012, all employers are required by law to auto-enrol employees over the age of 22 and earning £10,000 or more per year into a workplace pension. 

The legislation, however, did not stretch to contractors or gig economy workers classed as self-employed.

A number of legal cases in the past year have highlighted concerns about workers being wrongly classified by companies. 

Last summer, an employment tribunal found in favour of a group of 65 Hermes couriers that entitled them to be enrolled into the company’s pension scheme, among other benefits. 

At the same time, the Supreme Court ruled that an engineer at Pimlico Plumbing should be qualified as a ‘worker’ as opposed to a contractor under employment law, again entitling him to benefits he wouldn’t have otherwise received. 

Rt Hon Frank Field MP, chair of the Work and Pensions Select Committee, also criticised Ms Rudd and the government. 

He said: "We’re supposed to have entered the fourth industrial revolution. For millions of low-paid workers, it feels like the first.

"Eighteen months after our committees presented the government with a law to fix this, we continue to hear from scores of workers whose bogus self-employment gives rise to a life of insecurity and low wages. 

"End this wretched exploitation, make work pay, and let’s have an economy befitting the fifth richest nation in the world."

What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.