The government has U-turned on a manifesto pledge, saying that rather than bringing the self-employed into pension auto-enrolment, it will test a number of different approaches.
The government will only legislate on this before the end of this Parliament in 2022. This means considerable uncertainty will remain surrounding self-employed pension auto-enrolment.
- How to pay into a self-employed pension
- 75 per cent of Britain’s workers have no pension
- What expenses can I claim as a self-employed person?
- What type of business insurance do I need?
What did the Conservatives promise?
The Conservatives included a promise to widen pension auto-enrolment to the self-employed in their manifesto before the UK went to the polls in June 2017.
But the self-employed may have heard alarm bells ringing back in October, when pensions minister Guy Opperman said that “there is no simple solution” for including self-employed people in auto-enrolment.
Nathan Long, senior pensions analyst at online investment broker Hargreaves Lansdown, suggested that “the challenges of enrolling people into a pension via the tax return system clearly proved too great”.
What has the government promised now?
The Department for Work and Pensions said that it will test different approaches for the self-employed “that can work at scale”. Based on the outcome of the tests and consultations, it will legislate before the end of Parliament and deploy solutions as soon as possible.
This may come as a blow to self-employed people who were hoping for more concrete information on something to match the workplace pension scheme, which has now reached nine million people.
Former pensions minister Steve Webb said that “while testing different approaches makes sense, there needs to be much greater urgency about turning bright ideas into action”.
How can you save for retirement?
While the government is testing different approaches for self-employed auto-enrolment, exploring different options for saving for retirement remains important.
You can save in a personal pension, a stakeholder pension, or a self-invested personal pension (SIPP). The National Employment Savings Trust (NEST) also has a self-employed pension option. The pension provider then claims tax relief on your behalf.
How would you like to see the government tackle auto-enrolment for the self-employed? Let us know your thoughts in the comments below.