Master trust Nest’s research arm will be taking part in two pilots, which will test new forms of flexible saving for self-employed individuals.
Nest Insight is collaborating on two research trials, one with fintech pension provider Penfold, and the other with Moneyhub, an open data and payments platform.
These pilots are supported by the Department for Work and Pensions as part of a multi-year programme testing ways to help self-employed people save for retirement.
The pilots come in response to shortcomings made visible by auto-enrolment.
In the UK, around 4.3m people are in some form of self-employment, according to the Office for National Statistics, but it is estimated that only 16 per cent of them are actively saving into a workplace or personal pension. This compares with 88 per cent of the working population eligible for auto-enrolment through their employer.
Self-employed people are missing out on £4bn in annual pension contributions, FTAdviser's sister publication Pensions Expert previously reported.
The pilots will test different forms of flexible savings solutions and ‘nudges’. These approaches could be introduced into the online tools that self-employed people use already to manage their work and finances.
The solutions being trialled include supporting people to save a percentage of their income, nudging people to save at relevant moments — for example, when they receive a large payment, nudging people to save some of the difference between monthly income and expenditure in months when income is higher, and giving people the choice to connect different kinds of savings vehicle to save into for the future.
Previous Nest Insight research identified that control and flexibility to changing circumstances were important factors for self-employed people when it comes to saving.
The outcomes of the pilots will be analysed by Nest Insight and shared publicly next year.
Jo Phillips, director of research and innovation at Nest Insight, said: “The low level of saving for retirement by self-employed people is a well-known problem.
“It’s not that self-employed people aren’t interested — there’s a real appetite for saving for the longer term. But self-employed people have told us that it can be difficult to find ways to save that fit with their lives and context, as they often have limited time and headspace combined with variable income and future uncertainty.”
Phillips added that so far, “few solutions have been developed to address these barriers”, with Nest Insight hoping “these insights will inform the industry and policymakers on how best to support self-employed people to save”.
“The solutions being trialled are intended to be scalable and, if successful, could make it much easier for self-employed people to save towards future financial security,” she said.
Tom Higgins is a reporter at FTAdviser's sister publication Pensions Expert
