TPR calls on gig economy organisations to enrol workers in pensions

The Pensions Regulator (TPR) chief executive, Charles Counsell, has urged companies in the gig economy to proactively begin work on enrolling their employees into pension schemes, rather than dealing with the issue on a “case by case basis”.

The comments, made as part of TPR’s podcast series, follow the High Courts recent ruling that declared that Uber's employees were classed as workers and are entitled to employment rights, including being enrolled in a pension scheme.

Counsell stated: “Now I’m very pleased to say that Uber are engaging closely with us on making that happen, so that is really good news.

“But I’m going to call on other organisations in the gig economy to start to recognise that the people who work for them are workers and should be eligible for pension.

“After all, what this is all about is helping people who are working in the economy, helping people to have a decent standard of living in retirement.

"I really encourage those in the gig economy to take that stance and to start putting their workers into pensions. Let’s not deal with this on a case by case basis.”

Work and Pensions Committee chair, Stephen Timms, echoed this call for action on the podcast, noting that the issues around the gig economy will be explore in part three of the WPC’s ongoing inquiry into pension freedoms.

“I agree with Charles very much about the significance of the Uber decision and I’m pleased that Uber is constructively implementing that decision, and I also agree with him that others ought to be doing the same,” he stated.

“I know that a lot of my constituents who work in the gig economy stand to gain significant benefits if we can see that change happening.”

Keystone Law pensions and share schemes solicitor, Monica Ma, highlighted the comments as a “wake-up call” to gig economy companies that they need to carry out a careful assessment of their workforce to ensure they comply with their auto-enrolment obligations.

She explained: “Under the relevant legislation, the term 'worker' is very widely defined and may well encompass many individuals who work for these companies.

“Depending on their ages and earnings, these workers are entitled to be provided with pension benefits by these companies. It will be short sighted for a company to bury its head in the sand as this will just be storing up problems for the future.

“Apart from potential litigation from disgruntled workers, it may also find that future investors (be it during a funding round or an IPO) may look at this compliance issue carefully as, apart from reputational concerns, the potential costs to the company could be substantial.”

Industry experts have also backed the call for action, with Now Pensions chair of trustees, Joanne Segars, adding: “We support this call as our research shows that the self-employed and multiple job holders are vastly under-pensioned and reach retirement with private pension wealth just 15 per cent of the UK average.

“These people are often locked out of auto-enrolment because they tend to have non-traditional working patterns, such as part-time hours and multiple incomes.”

“Now Pensions is lobbying the government to remove the £10,000 auto-enrolment trigger and to help more people access private pension saving.

"These measures would generate an additional £1.2bn in annual pension contributions whilst also ensuring multiple job holders can adequately save enough for their later life.

Speaking on the podcast, Timms also said that he was hopeful that the government would remain on track to introduce further auto-enrolment reforms in mid-2020s "as always planned", acknowledging that whilst the recent economic shocks could present an argument to change this timeline, auto-enrolment contributions have held up well despite the pandemic.

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