The government is working on new ways to encourage retirement saving among Britain’s 4.8 million self-employed.
New approaches that would allow self-employed people, around 15% of the UK workforce, to save for short, medium and long-term financial goals – for example, catering for those with irregular incomes – will be tested through trials and research to be launched imminently.
Features of the trials include:
- Encouraging employees who become self-employed to keep making regular, affordable, contributions to a pension or other long-term savings product
- Better use of financial technology to help the self-employed overcome barriers to saving
- Making the most of communication points of contact used by self-employed people – such as online accounting systems – to promote saving for retirement in an easily understood way
Guy Opperman, Minister for Pensions and Financial Inclusion, said, “Only around 1 in 7 (14%) self-employed people were saving into a pension in 2016 to 2017. Our trials are designed to make sure that this diverse group of people gets help to plan ahead for greater financial security and the lifestyle they aspire to in later life.
“We want to see effective, long-lasting solutions that boost the future prospects of millions of hard-working self-employed people, and will work with the financial services sector, professional trade bodies, unions and others to achieve that.”
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Federation of Small Businesses (FSB) National Chairman Mike Cherry, commented on the launch, “As things stand, thousands of sole traders will struggle to retire at a sensible age because they simply aren’t saving enough. Fewer than one in three self-employed people save into a private pension. That compares to more than three quarters of employees. Unless we get the self-employed saving more, we risk a real financial calamity a few years down the line.
“It’s encouraging to see the Government taking this issue seriously – trialling different ways to address this challenge is the right way forward. Today’s report takes on board FSB’s recommendations for using the self-assessment process as an opportunity to nudge sole traders to put more away for the future. It also stresses the importance of pensions dashboards – another crucial intervention that we’ll continue campaigning for.
“The self-employed hugely value freedom: an auto-enrolment model is not right for them. The key here is behaviour change. We look forward to working with DWP to see how we can get more sole traders thinking about retirement. Saving for the future shouldn’t be an afterthought.”
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