Government to push self-employed & # 39; push & # 39; to prepare for their retirement

Pensions for the self-employed: the government has enforced a manifest undertaking to bring them into the car registration network

The government must try to find ways to encourage self-employed people to take care of their pensions after a collapse in the number of saved pensions

It intends to test prompts to save for old age that focus on the benefit for your family, rather than the individual benefits.

And it will stimulate pension savings when people use accounting and banking systems, and cooperatives of trade organizations and trade unions help to strengthen the message.

Only 14 percent of the nearly 5 million self-employed people in the UK saved a pension in 2016/17 – a dramatic decrease compared to 30 percent in 2007/08.

Pensions for the self-employed: the government has enforced a manifest undertaking to bring them into the car registration network

Pensions for the self-employed: the government has enforced a manifest undertaking to bring them into the car registration network

The rise of the "gig" economy is often cited as a reason for this decline, because more people take on more casual and insecure jobs – often because of a lack of other options – and therefore have difficulty saving.

A new package of measures to improve the rights of temporary workers and workers, was announced yesterday.

Meanwhile, the government noted today that the self-employed have a comparable total of employees, but that a larger share of their savings is in real estate than in pensions.

This could indicate that some people who do business for themselves find owner of real estate as a better way to save for old age.

The decline in pension savings by self-employed people coincided with the successful initiative to automatically allow employees to participate in pension schemes for work, unless they actively refuse to participate.

Government data released today also showed that the automatic registration opt-rate did not change in April and June this year, when the mandatory minimum contribution of employees was increased from 0.8 percent of eligible earnings to 2 , 4 percent.

The minimum contribution is expected to rise to 4 percent in April.

Today's announcement that measures to encourage self-employed people to save for their pension follows the fate of a conservative manifest declaration to bring them into the auto-registration network.

The government then said that it would look at ways in which technology can be used to encourage self-employed people to increase their pension savings.

It has signed partners to assist with various surveys, including NEST, a government-run auto-enrollment provider, currently saving & # 39; sidecar saving & # 39; test.

This means that in addition to a pension, people can also build up a savings fund for emergency aid, but after it has reached a certain level, all contributions are diverted to the pension.

People who might otherwise not have been saved would therefore be helped to do this without risking an unexpected bill that would put them in debt.

Pensions Minister Guy Opperman said: & # 39; Only about one in seven self-employed saved a pension in 2016-17.

& # 39; Our processes are designed to ensure that this diverse group of people receive help in planning better financial security and the lifestyle they aspire to in later life.

We want to see effective, sustainable solutions that increase the future prospects of millions of hard-working self-employed people, and work together with the financial sector, professional trade organizations, trade unions and others to achieve that. & # 39;

What does the pension industry say?

& # 39; The growth in the number of self-employed people was reflected by a catastrophic decline in their pension savings, & # 39; said Tom McPhail, head of policy at Hargreaves Lansdown.

The government emphatically promised to address this in its 2017 election program by extending the benefits of automatic enrollment for self-employed people.

Unfortunately, there is no solution to the miracles needed to match the revolution in car enrollment that employees are now benefiting from.

The Taylor assessment of employment suggested car-enrollment through the tax system, but the government has never been raving about it. Instead, they are now looking at field trials around various engagement messages to encourage self-employed people to resume or retain their savings. & # 39;

The government is also interested in trying to automatically record pension contributions using billing systems. & # 39;

Tom Selby, senior analyst at AJ Bell, said: & # 39; It is difficult to see how the series of interventions and investigations described today by the government amount to making automatic enrollment available to the self-employed.

How does Lifetime Isa work?

Lifetime Isas allows minors to save for a house and retire at the same time.

The government offers free top-ups worth up to £ 32,000 if you use your fund at its maximum during your younger to middle age. Read more here.

It is now clear that this promise was made in the rush of the general election campaign without really thinking about the practical aspects to make it happen.

In the present form, the Conservative Party thus seems determined to violate this specific manifesto devotion.

& # 39; However, it is possible that something good may come from the embers of this broken promise.

& # 39; The focus on building simple, effective communication that elicits positive action from savers is absolutely right and should apply in the entire pension savings landscape.

& # 39; The focus on increasing savings among self-employed people offers an opportunity to look again at the Lifetime Isa, a product that may appeal to many people.

The age restriction and exit penalty are currently major obstacles – demolition of both can make it seriously attractive as a more flexible retirement alternative. & # 39;

Steven Cameron, retirement director at Aegon, said: "The government's focus on pensions for the self-employed is extremely welcome, alongside the newly announced improvements to employees' rights to reflect the reality of today's labor market.

& # 39; It is important not to assume what is good for employees, necessarily corresponds to different types of self-employed people or people in the & # 39; gig economy & # 39 ;.

& # 39; Many of these people have a very variable income and often have to deal with previous income to invest in the growth of their business.

& # 39; You may have to combine a few easily accessible & # 39; the savings savings couples & # 39; with a flexible pension product the trigger is to help them on their way to larger pension savings schemes. & # 39;