DWP to trial auto enrolled pensions for self-employed

The Department for Work and Pensions (DWP) is seeking input on its plans to develop and test options designed to encourage self-employed people to save for short, medium and long-term financial goals, including a pension

Guy Opperman, minister for pensions and financial inclusion, said: ‘Only around one in seven (14%) self-employed people were saving into a pension in 2016 to 2017. Our trials are designed to make sure that this diverse group of people gets help to plan ahead for greater financial security and the lifestyle they aspire to in later life.

‘We want to see effective, long-lasting solutions that boost the future prospects of millions of hard-working self-employed people, and will work with the financial services sector, professional trade bodies, unions and others to achieve that.’

The trials will assess new approaches to encouraging employees who become self-employed to keep making regular, affordable, contributions to a pension or other long-term savings product.

They will also examine better use of financial technology to help the self-employed overcome barriers to saving and making the most of communication points of contact used by self-employed people - such as online accounting systems - to promote saving for retirement in an easily understood way.

The DWP says it is keen to understand whether there are mechanisms that can help self-employed people make regular saving contributions within the day-to-day management of their finances.

A hallmark of automatic enrolment is that the use of payroll enables automatic contributions to be made into a pension scheme for the individual worker, and it wants to explore using systems that will work towards achieving a similar outcome, for example, a commitment to make a contribution to a pension via an invoicing or accounting systems.

The department is already working with NEST and organisations from the financial services sector, including Lloyds Banking Group, Barclays and Aviva, and trade bodies including IPSE on the trials.

The consultation points out that although the implementation of Making Tax Digital (MTD) for income tax is unlikely to be in place before mid-2020, the DWP is already engaging with software providers who will develop solutions for accounting and self-assessment purposes to explore the scope to also test behavioural prompts focussed on pension savings.

It also invites organisations from a range of sectors, including invoicing software providers and accounting organisations, to work with the DWP to co-design and test interventions. 

The deadline for comments is 15 March 2019.

Pensions and long-term savings trials for self-employed people is here

Report by Pat Sweet

Average: 4 (1 vote)