Pensions sector urged to rethink support for self-employed workers
The United Kingdom’s pensions sector is being urged to reconsider the way it supports self-employed individuals in building retirement savings, according to a recent paper released by the Society of Pension Professionals (SPP). The study, titled The Missing Millions: Rethinking Pension Policy for the Self-employed, argues that existing arrangements do not reflect the everyday realities faced by sole traders, freelancers and micro-business owners, and it calls for a redesign of the system to better match modern work patterns.
Low participation rates
While automatic enrolment has drawn millions of salaried workers into pension schemes, only about four per cent of people who are wholly self-employed now make regular pension contributions. The organization contends that this shortfall stems from a structural flaw rather than a lack of desire to save. It characterises the current environment as an “obstacle course” for independent workers, a stark contrast to the “frictionless escalator” that employees experience through employer-driven plans.
Because self-employed individuals do not have a conventional employer, they miss out on payroll deductions that automatically channel a portion of earnings into retirement accounts. This gap leaves a large segment of the workforce without a clear, streamlined path to a stable income after they stop working.
Proposed solutions
“Automatic enrolment changed the default to ensure millions more employees save for their retirement. But millions of people who work for themselves have never benefited from that same principle,” said Martin Willis, chair of the SPP Self-employment Working Group.
