BUDGET 2018: DWP to boost pensions for self-employed

The government has announced a boost to self-employed pensions in its Budget for 2018, confirming it will publish a paper to increase participation.

Chancellor Philip Hammond’s Budget included an announcement that the Department for Work and Pensions this winter will publish a paper setting out the government’s approach to increase pension participation and savings persistency among the self-employed.

The announcement follows the 2017 review of auto-enrolment. The Budget stated that it will “focus on expanding evidence through a programme of targeted interventions and partnerships”.

Pensions for the self-employed has been widely discussed in recent months, with Nest revealing plans to encourage the self-employed to save more for their retirement through research published 23 October.

The report, Working for today, preparing for tomorrow, identified three main sub-groups that the self-employed fall into and over the next couple of years, Nest Insight will trial approaches to increase savings.

Nest Insight executive director Will Sandbrook noted that auto-enrolment has had a “hugely positive” impact on pension savings rates in the UK, but stated that of the five million self-employed workers in the UK, just 17 per cent are saving for their retirement.

In June, Nest said it was set to pilot a model which allows savers to have a liquid savings pot that attaches onto your pension and that it could be a potential solution for the self-employed, but that it would not be a one size fits all remedy.

A similar solution is being looked at in the US and trails are underway to make the first £1000 of savings accessible before putting a lock behind.

Speaking at the Association of British Insurers (ABI) conference 11 October, DWP deputy director for automatic enrolment and defined contribution pensions, Fiona Walker, said the sidecar model of saving for the self-employed is a more attractive proposition than auto-enrolment or than having “open early access to pensions”.

At the conference, Walker said: “There is a lot of discussions about the sidecar concept that Nest is piloting and whether or not you can have a liquid pot that attaches to a pension. I’m personally more attracted to that as an idea that allowing a much more early open access to a pension. Some sort of hybrid sounds like it could be really attractive, but again we will need to see how the pilots work.”

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