Five million self-employed are set to benefit from radical changes which could see them able to select their own state retirement date and be automatically enrolled into pension schemes (1).
The move follows mounting concern of a pension crisis among the 5 million self-employed who have been excluded from most government pension reforms. The government flag-ship auto-enrolment scheme for company employees has already led to an extra 11 million people saving into pensions (2).
The review was triggered by the Work and Pensions Select Committee who see the automatic enrolment of the self-employed into pensions as a priority. The committee believe this would get thousands of self-employed workers saving for their retirement funds, potentially boosted by special government bonuses (3).
John Cridland, who is leading the review into state retirement age, recently questioned whether a single state pension age “had utility today when job structures and the market have so much variation, such as in the case of self-employed people.” He suggested that under the new regime people would have the freedom to choose to retire at a younger age and collect a smaller state pension (3).
Pension Minister Richard Harrington commented: “It is clear automatic enrolment is playing a key role in shaping the retirement landscape for generations to come. However I want to build on this success and will be looking at how we can get even more people saving, and saving more (1).
“Pension experts have welcomed the likely reforms as a key measure in helping the self-employed avoid real hardship in old age. Jon Greer, a pension expert at Old Mutual Wealth, said: “It is encouraging that the Pensions Minister has said he will see if it is possible to find a mechanism to bring the self-employed into automatic enrolment.” (3)
Final recommendations are expected in March next year.
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
The Financial Conduct Authority does not regulate on Automatic Enrolment.