Auto enrolment 'not the answer' to self-employed pensions crisis: IPSE report

The report – titled ‘How to solve the self-employed pensions crisis’ – found that less than a third (31%) of the UK’s 4.8 million self-employed population are paying into a pension, while 67% are concerned about saving for later life.

Millennials, women and those new to self-employment face a particularly bleak future and are at risk of pensioner poverty, which willld increase reliance on the state pension.

The report was particularly critical of automatic enrolment, with only 36% of the self-employed saying they would remain enrolled compared to 25% who would opt out and 38 % who don’t know.

IPSE used nationally representative research by ComRes (which comprehensively analysed the attitudes of over 1,000 self-employed people), as well as a broad consultation with the industry and Government, to develop a number of recommendations to combat the looming crisis, including rolling out a 'sidecar' pension scheme to the self-employed and providing access to mid-life MOTs to help self-employed people assess their financial helth.

Jonathan Lima-Matthews, IPSE’s Senior Policy Adviser, commented:

“With just 31 per cent of the self-employed saving into a pension, we must take urgent action to avert a looming crisis. Self-employment is a progressive way of working, but unfortunately current pension provisions simply do not cater to their needs.

“While Auto Enrolment has been a successful policy for boosting the number of employees paying into a pension, our research found it’s simply not a viable savings solution for the self-employed. There is no employer to enrol them, and it also reduces their ability to be flexible and in control of their money – two of the fundamental attractions of self-employment.

“The recent growth in self-employment has been a revelation, but now we need a revolution to provide them long-term financial security and alleviate this ticking timebomb. There is a real opportunity for both Government and the pensions industry to avert this crisis by developing feasible and forward-thinking solutions to give long-term peace of mind to the burgeoning self-employed workforce.”