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Pensions: government skips self-employed pledge

Retirement experts accuse government of breaking manifesto pledge by not extending successful auto-enrolment policy to self-employed.

Pensions: government skips self-employed pledge

Retirement experts have accused the Conservative government of breaking  a manifesto pledge by not extending the successful auto-enrolment pension policy to the self-employed. 

A review of the five-year-old programme, which automatically enrols workers into company pension schemes if they are not already in one, will say the government will use ‘targeted interventions’ to encourage retirement saving among the self-employed when it is announced today.

The package of reforms will also lower the minimum age workers can be auto-enrolled from 22 to 18, bringing 900,000 more people into workplace pensions and adding £800 million of contributions, and scrap the lower earnings limit of £5,824.

However, for pension experts the measures fall short of the Conservative manifesto pledge to ‘make auto-enrolment available to the self-employed’. 

This commitment was repeated by pensions minister Guy Opperman at the Conservative Party Conference when he said there was ‘no doubt whatsoever’ the government would extend the policy to the self-employed.

However, this weekend the Department for Work and Pensions would only say it was considering ‘opportunities to work with organisations who act as “touch points” for the 4.8 million self-employed people, such as banks and those who contract labour, to explore how technology can be used to increase their pension saving.’

Writing for the Guardian, work and pensions secretary David Gauke (pictured) said the government was looking at tax returns as part of these ‘interventions’ but he did not say there would be an extension of auto-enrolment to the self-employed.

Tom Selby, senior analyst at AJ Bell, the investment broker, said this did not live up to the manifesto. ‘Most would regard the new pledge to simply encourage self-employed people to save in a pension, rather than them being auto-enrolled and having to opt out, as breaking this manifesto commitment.’

Steve Webb, former Liberal  Democrat pension minister in the 2010-15 coalition government and now director of policy at Royal London, a pension provider, said the phrase make auto-enrolment ‘available’ for the self-employed was ‘meaningless’ as people were either auto-enrolled or not.

‘Anyone reading that [the manifesto] would have assumed they were going to auto-enrol the self-employed, because pensions are available to the self-employed now. So anyone who read the manifesto would have thought auto-enrolment was coming to self-employed. It is pretty clear that it isn’t in the foreseeable future.’

The DWP declined to comment.

Ways of making auto-enrolment work in the context of self-employed individuals have already been presented to government.

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2 comments so far. Why not have your say?

John Griffiths

Dec 18, 2017 at 16:43

Whole point of self employment and frelancing is to have flexibility. This is being eroded on one side by using IR35 rules to trap people who take the risk of non-permanent employment and its flexibility which used to provide better rewards than being employed. Now that there is far less flexibility in the system the freelancers and self employed are having benefits pushed on them that they did not ask for.

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Roger Savage

Dec 18, 2017 at 21:25

Let people make their own choices. There's plenty of info out there - if people use resources like the internet properly instead of reading what everyone has had for dinner on social media! All that's needed is an emphasis on making pension provisions via something like a SIPP. Very few people want Auto Enrolment (that's my perception at least). Nanny doesn't know best but nanny may want to tax or grab the proceeds in pensions at some future date, perhaps that's why they're so keen on Auto Enrolment.

In fact, that's the only reticence I would have about any form of pension - shifting retirement ages (for SIPPs also) and other government treachery.

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