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New plan to tackle self-employed pensions crisis
The government, in partnership with the pensions industry, is to trial a new initiative designed to help self-employed workers save more for later life.
The Department for Work and Pensions (DWP) is working with Aviva, Barclays, Lloyds Banking Group, NEST Insight, Smart Pension and Aegon along with the Association of Independent Professionals and the Self-Employed (IPSE).
Together, they are developing a programme of behavioural trials that will test different messaging, presentation treatments and tools to encourage increased saving among the self-employed.
Guy Opperman, minister for pensions and financial inclusion, said: “Self-employment has become an important feature of the UK labour market … around 15% of the workforce is self-employed. While individuals classified as self-employed will benefit from the new state pension, they are much less likely than employed workers to accumulate private pension saving …The diversity of self-employment, however, demands a different kind of policy response.
“Our long-term ambition is for future generations to have confidence in retirement saving – no matter what type of employment or self-employment they experience during their working lives – so they can prepare for greater security in later life.”
Earlier this year IPSE published a report, How to solve the self-employed pensions crisis, which found that just 31% of self-employed workers are saving into a pension. It also said that Automatic Enrolment will not defuse the “ticking time-bomb” that is the self-employed pensions crisis.
The report found that products tailored to the needs of those that work for themselves – including the sidecar pensions scheme, improved government guidance and policy documents that are jargon-free – are the key solutions. These recommendations will form the basis of the forthcoming trials.
Jonathan Lima-Matthews, IPSE’s senior policy adviser, said: “There is an urgent need to avert what is a looming crisis. As concerning as the situation is though, it also presents a fantastic opportunity to enact positive change on behalf of millions of self-employed people across the UK … In partnering with both government and industry, IPSE is inspiring innovation, and making good on our commitment to help overcome the self-employed pensions crisis. We strongly encourage others within the pensions industry to follow suit and help three million self-employed people save for a secure future.”
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