Pensions  

Self-assessment pension trial results expected in summer

Self-assessment pension trial results expected in summer
(REUTERS/Hannah McKay) John Glen, local Member of Parliament for Salisbury and South Wiltshire

The results of a trial to boost retirement savings for self-employed, involving the existing self-assessment tax system, will be published in summer, a Treasury minister has revealed.

In a letter to Work and Pensions committee chair Stephen Timms, published on June 22, John Glen stated the government is working on different trials for self-employed savings.

He revealed the Department for Work and Pensions is working with HM Revenue and Customs “to explore the opportunities presented through Making Tax Digital and software suppliers”.

In advance of this, both entities have undertaken a trial with the Money and Pensions Service which was run between October 2021 and February 2022 involving the existing self-assessment tax system, he noted.

Pensions Expert reported in June that the Pensions Regulator’s chief executive Charles Counsell backed using self-assessment tax returns to encourage more self-employed people to save into pensions.

Glen argued the DWP “remains committed to developing effective durable retirement solutions for the self-employed, and continue to build the evidence base to find ways to make retirement saving easier for self-employed individuals”.

The results of the self-assessment trial, alongside other projects being developed with Nest Insight and other partners, is expected in summer 2022, Glen added.

The Treasury minister responded to a letter from Timms under the committee’s third stage of its inquiry into pension freedoms, looking into savings for later life, where the Labour MP said “HMRC may have a crucial role to play in delivering a solution to long-standing issues”.

He also questioned Glen on a suggestion regarding the issue of people with multiple jobs below the £10,000 auto-enrolment earnings trigger. These individuals might have a take home pay that exceeds that value, but they are not enrolled into a pension scheme since none of their single incomes is above the threshold.

“It was suggested that HMRC could notify employers when a particular individual’s earnings were above a particular threshold, which could be a trigger for that employer to auto-enrol that employee,” Timms said.

Glen responded that current legislation “does not require an individual with multiple earnings which cumulatively exceed this threshold to be enrolled into a pension scheme”.

Moreover, “HMRC systems would not currently be capable of achieving this and the practical implications of doing so are not insignificant,” he revealed.

He explained that it would also present “an ethical challenge by, for example, requiring HMRC to disclose information about an individual’s total employment income to each employer, challenging the important principle of taxpayer confidentiality”.

Maria Espadinha is Editor of Pensions Expert, FTAdviser's sister publication