The government’s response to the Taylor Review offers “little hope” for improving the pensions of the self-employed, Royal London director of policy Steve Webb has said.

Commenting on the government’s response to the review, published today (7 February 2018), former Pensions Minister Webb “welcomed measures on workers”, but said it was worrying that the issue of gig economy pensions had again been “kicked into the long grass”.

In its response, the government highlighted a number of key features for workers including enforcing vulnerable workers holiday and sick pay entitlements, as well as stable contracts for zero-hours and agency workers, but made no reference to Taylor’s recommendations on improving pensions for the self-employed.

Webb said: “The government response offers little hope for improving the pensions of the self-employed. The government’s automatic enrolment review merely proposed some further research and testing on pensions and the self-employed, which is not up to the urgency of the problem.“

In the 2017 Automatic Enrolment Review the government said it was going to take a “test and learn” approach to find the most effective way to encourage 4.8m self-employed workers to save for a pension, admitting that the current framework is “not appropriate”.

“Pension membership among employed workers has soared because of automatic enrolment, but it remains shockingly low for the self-employed. It is very worrying that this issue has again been kicked ‘into the long grass’, meaning that millions of self-employed people face an insecure retirement”, Webb added.

The Taylor Review, published in July 2017, welcomed the Conservative manifesto commitment to make auto-enrolment available to the self-employed and urged the government to "think creatively" about the issue.

Auto enrolment has meant that over nine million people are now saving into a workplace pensions, but the government has come under pressure to help those in the gig economy, which as of 2017 made up 15.1 per cent of the labour force, according to the Office for National Statistics (ONS).

The most recent ONS statistics also reveal that 45.1 per cent of self-employed workers aged 35 to 54 have no pension wealth, decreasing to 30.3 per cent for those aged 55 and over, compared to just 16 per cent and 14.2 per cent of full-time employees, respectively.

Pensions and Lifetime Savings Association policy lead, Tim Gosling, said that the government response will help prevent employers wrongly catergorising people as self-employed and therefore not eligible to be enrolled into a workplace pension.

Despite this, Gosling admits it does not address the self-employed issue and vows to continue working closely with the government and the industry to help tackle the issue.

Barnett Waddingham senior consultant, Malcolm McLean, said: “The latest data from the ONS illustrates just how big the problem is and how many self-employed workers are surely heading for an impoverished old-age.

“Between July 2014 and June 2016, just 25 per cent of self-employed people were actively contributing to a private pension compared to 66 per cent of employees. This means that 3.3 million self-employed workers are not making any pension contributions.

“These are quite shocking statistics and point to a looming crisis which has to be addressed sooner rather than later. If it really is impracticable to bring the self-employed into some form of auto-enrolment, as the government now seems to have concluded, then they must find a way of stimulating or even compelling greater pension saving from this growing group of workers before it is too late."

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