A missed opportunity
for pensions in government’s new gig economy plans
18 January 2019
Fears that proposals would not go far enough appear to be justified says Laura Myers.
It should be good news for the 5 million or so Britons who work in the UK’s gig economy. The government has revealed plans to bolster workers’ rights via a range of measures, from addressing pay inequalities to adjusting the system for calculating leave entitlements. Given how fast the gig economy is growing, encompassing a wide range of sectors from delivery drivers to finance professionals, cleaners to consultants, many have argued that better protections are long overdue.
But what about pensions? Self-employed gig economy workers aren’t covered by auto-enrolment – meaning that many aren’t saving enough, or at all, for their retirement. If they are accorded rights that are more in line with their employed counterparts, then it’s surely right that pensions should come into the mix too.
Any extension to auto-enrolment?
I’d hoped that the new plans would bring many more of these workers into the auto-enrolment fold. Helpfully, last year’s Taylor Review of modern working practices made a number of sensible suggestions in this regard, such as the possibility of auto-enrolling the self-employed and administering this through the self-assessment process. Indeed, there was even a Conservative manifesto pledge at the last election to make auto-enrolment available to the self-employed.
Sadly, the Government now appears to have overlooked these options in favour of trialling a series of marketing and behavioural nudges and tech tools.
Creative maybe – but will proposals work?
All very laudable and I’m sure there’s merit in them, but however promising, they’re unlikely ever to be as effective as an auto-enrolment-style route. The Taylor Review issued a clarion call for policy-makers to “think creatively on ways to improve pension provision amongst the self-employed.” These proposed new measures may be creative, but it remains to be seen whether they’re really up to the job in hand, particularly when the past has shown the power of defaults over engagement.
What’s needed now is continued pressure on the part of the pensions sector to push for further feasibility studies to be conducted on the roll-out of auto-enrolment to the wider modern workforce outside of formal employment, and to step in with constructive ideas of how this might work.
An innovative sector needs an innovative approach
Granted, the gig economy is certainly a challenging area to make policy for, as it covers such a wide range of activities and comprises workers with diverse income levels and differing goals and motivations. For every worker who loves the flexibility, financial rewards and variety it provides there’s another concerned about the insecurity, low pay or lack of say about their working arrangements. Satisfying them – and the companies that hire them – is a tricky balancing act.
That said, solutions need to be found to ensure pensions is prioritised for all workers. For all its critics, the gig economy is nothing if not innovative, and those who work in it need a standardised pension system. Time for our industry to get more actively involved.