Govt to trial self-employed solutions with key pension providers

The government is set to launch a number of trials with key pension providers, aimed at prompting self-employed individuals to save.

Launched today, 18 December, Enabling retirement savings for the self-employed: pensions and long-term savings trials, the Department for Work and Pensions said it will be working with providers including, Nest Insight, Smart Pension, Aegon and the Association of Independent Professionals and the Self-Employed (IPSE) to find workable solutions to self-employed savings.

The trials, which will have three focus areas, will look at marketing interventions at people who have previously saved, marketing with self-employed trade bodies to promote the value of saving and behavioural prompts such as text messages to engage self-employed people.

Opperman said that the DWP has been carrying out “considerable engagement” with fintechs and service providers in order to “reveal opportunities for trials that may have greatest effect at scale”.

“This report provides the government’s delivery plan and complements our agenda to empower and improve the consumer experience, in particular through Pensions Dashboards and the Single Financial Guidance Body,” Opperman said.

“It is also a call to action. Developing and testing potential solutions relies on the development of new partnerships within and across sectors including payment systems; accounting technology; self-employed workspaces and growing fintech firms providing new services. The government calls on organisations within these sectors to work with us to co-design and test interventions.”

The report has no reference to auto-enrolling the self-employed or using the tax system to help them save.

Additionally, the government said the key principles of the report are to increase saving participation, remain open minded as to whether pensions are an appropriate tool for the self-employed, capitalising on existing points of contact, improving customer outcomes and supporting good quality products.

Royal London director of policy Steve Webb believes the proposals do not go far enough.

“Despite a 2017 manifesto commitment to include the self-employed in automatic enrolment, we now know that all we will have by 2019 is more research and pilots, mainly focused on testing different forms of marketing message,” he said.

“The lesson of automatic enrolment is that by far the most effective method to nudge the self-employed into pension saving would be via an opt-out system administered through the tax return process which could reach up to two million self-employed people a year.”

According to the Department of Work and Pensions, 15 per cent of the workforce is currently self-employed, while just 31 per cent are saving into a pension.

The government’s 2017 manifesto stated that “we will continue to extend auto-enrolment to small employers and make it available to the self-employed”.

However, AJ Bell senior analyst Tom Selby said that it was a promise made in the “rush of a general election campaign”.

“We would urge the DWP to engage not only with industry and the self-employed but also regulators to ensure comprehensive, workable solutions are brought forward,” he said.

“The focus on boosting saving among the self-employed presents an opportunity to look again at the Lifetime ISA, a product which could potentially appeal to many people. The age restriction and exit penalty are significant barriers at the moment – scrapping both could make it seriously attractive as a more flexible retirement saving alternative.”

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