The government has announced that it will publish a paper setting out “targeted interventions and partnerships” to boost pension saving amongst the self-employed early next year.
In its publication, Good Work Plan, the Department for Business, Energy and Industrial Strategy addressed recommendations set out by the Taylor Review of Modern Working Practices.
One of the recommendations encouraged the government to “think creatively” on ways to improve pension provision amongst the self-employed, make the most of “opportunities presented by digital platforms” and the move to “more cashless transactions”.
In response, the Department for Work and Pensions will publish a paper setting out the government's approach to “increasing pension participation and savings persistency” among the self-employed.
Commenting on the government’s announcement, AJ Bell senior analyst, Tom Selby said: “The shift in working patterns away from more traditional forms of employment presents a major retirement savings headache for the government.
“While automatic enrolment has been successful so far in boosting pension participation among employed staff, around five million self-employed workers are not covered by the reforms.
“There are, unfortunately, no easy solutions to this particular challenge. The government has made clear it will not look to replicate the matched contribution available through auto-enrolment through the tax system, meaning any interventions are likely to focus on ‘nudges’ and improved communications of the benefits of saving.”
The Taylor Review set out a total of 53 recommendations aimed at improving the rights of self-employed workers and the government has committed to implementing 51 of these recommendations.
This includes tackling the issue of under-saving amongst some of the ever increasing number of self-employed workers.
Selby concluded: “The jury is still out on the extent to which a softly-softly approach can really drive through a change in behaviour, however. Employed workers have needed more of a shove through auto-enrolment to get saving and it seems unlikely anything less will seriously boost take-up among the self-employed.
“The Lifetime ISA is one product that, with some fairly small tweaks, could be tailored to appeal to this part of the market.
“The key flaws in the LISA at the moment are the age restriction and the overly-harsh early exit penalty. If these were removed it would all of a sudden become a flexible retirement saving alternative with serious appeal for the self-employed.”