Pensions can be a contentious issue and there're not many aspects of the pensions industry that you will find the majority of industry stakeholders agreeing upon. But the future faced by millions of the UK's self employed is one of them. Recent statistics show that the number of self employed people contributing to a pension scheme has drastically reduced since the start of the 21st century with 1.1 million paying into a retirement fund in 2001 to just 380,000 contributing today. That works out as just 16% of self employed working age adults are participating in a pension scheme. New pensions minister Richard Harrington has indicated that this is an issue that he will be looking into but he has not yet confirmed whether it will form part of a review that he is having next year. Other pension industry experts have been quite vocal on the matter however:
Former pensions minister Steve Webb said there was ' not a moment to wait' to address the issue of falling contributions by self-employed workers. 'Pension membership among the self-employed – and self-employed women in particular – is chronically low and falling.'.
Richard Harrington's predecessor, Baroness Ros Altmann, former pensions minister and one of the UK's foremost experts on pensions pointed to the changing employment landscape as being a factor:
'Things are different for those young startup, gig economy type roles. With auto-enrolment the lowest opt-out rates have been amongst the young, so if we have got a lot of young people starting their own businesses there will be a potential divide in the future between the haves and have-nots in pensions'.
However, it's not just the self employed that are missing out. Those workers who work several jobs that all fall below the qualifying earnings for auto enrolment are also missing out and they could number about 80,000. It's an issue that the TUC (Trade Union Congress) have called for action on.
'Automatic enrolment has been a great success, giving 6 million more people access to a workplace pension. But it mustn't be allowed to become a policy that works well for men in traditional full-time work but excludes others. Millions of low-paid workers, most of them women, are still missing out. We need to remove the barrier of the earnings trigger so that the millions of workers in part-time work, including those holding down multiple jobs, are automatically enrolled into workplace pensions too.'
'Many self-employed people could now be earning the minimum wage, maybe a bit more, but it is complicated. In the end we have to look at them being included in an envelope like the automatic enrolment system – and the same with people who have multiple jobs.'
With so much good work done by auto enrolment, it would be a shame if millions more were not given access to it. There is some hope though. Whilst Richard Harrington has not said anything specific about these issues being placed in his review next year, he did recently say in an interview with the Financial Times that extending auto enrolment to the self employed 'should be the kind of thing that we are talking about'.