Guest Comment: The future of auto-enrolment

Written by ABI assistant director, head of retirement policy Rob Yuille

It is widely acknowledged that the concept of automatic enrolment can and should be adapted to benefit the self-employed, and the ABI was pleased to see that this will be considered as part of the government’s 2017 Automatic Enrolment Review.

However more research is needed to better understand gig economy workers, who they are, and what specific challenges they face in interacting with the welfare system and saving for retirement.

Among other things, the government should consider how the concept and framework of AE could be adapted from its current form to benefit the ‘gig economy’ via an equivalent system of pension saving.

This system could be based on an adaptation of a model put forward by one of our members, where the self-employed are opted in to a scheme based on Class IV National Insurance Contributions, which are usually paid through self-assessment returns. This seems the most obvious system to deliver an AE-like ‘nudge’.

However, it’s important to recognise the potential problems that might arise for self-employed individuals who may save enough money to pay their tax at the end of the financial year, but may not have the additional funds to contribute towards a pension.

The government will need to communicate any rollout of a pension policy for the self-employed with a national awareness-raising campaign aimed at individuals submitting self-assessment returns, with frequent signposting to tailored information and guidance from the government’s new financial guidance body.

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