Gig economy workers’ pension woes under the spotlight

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Gig economy workers’ pension woes under the spotlight

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By Felicity Anderson

New research has highlighted the scale of anxiety faced by self-employed and gig economy workers about their lack of pension provision and savings.

Think tank, Demos, reported that, ‘one in two of self-employed workers were “seriously concerned” about their lack of savings, while 38 percent were “seriously concerned” with current pension provision,’ according to news site City A.M.

The findings come as a new government report into the gig economy, highlighted in the Guardian last week, shows that one in four of the workers it surveyed were earning less than £7.50 an hour, which is below the national Living Wage of £7.83 for people over 21.

Along with its recent findings, Demos has spoken out about a “corporate bias,” which it claims supports traditional employment but has reduced efforts to better protect the 15% of the British workforce who are self-employed.

“We need a new deal to boost security for the self-employed”

Alan Lockey, head of Demos’ Modern Economy Programme, said:

“The rise of self-employment is one of the biggest changes to the modern economy in the last couple of decades and our research shows it is an enjoyable experience for most people,”

“We need to think pragmatically about whether we should actively encourage it – it could be that it is the British solution for a more flexible, less rigid approach to life and work in the future, as it already is for millions of people.

“That means we need a new deal to boost security for the self-employed and by far the most urgent problem is dealing with a looming pensions and savings crisis.”

A new pension scheme for the self-employed?

Demos has called for the introduction of an auto-enrolment pensions scheme for solo self-employers, alongside an “engagers tax” to help fund such a scheme.

This has, however, been questioned by some, with questions raised about the feasibility of raising the necessary government funding.

Gig economy workers’ pension woes under the spotlight

Speaking to City A.M, Tom McPhail, head of policy at Hargreaves Lansdown acknowledged the “significant misalignment” between employment law and taxation on one hand and the needs and interests of the self-employed on the other, he says:

“We estimate the report’s proposed auto-enrolment of the self-employed via the tax system plus the government top-up of 4 percent of earnings would cost the Treasury in excess of £3bn a year, which looks like a lot to ask for right now,” he explained.

Striking the balance

Striking the balance between rights and flexibility for workers could also prove difficult, with Julia Kermode, chief executive of The Freelancer & Contractor Services Association (FCSA), explaining to the Guardian:

“For the majority of independent workers, it is an informed choice and they value the flexibility that being self-employed offers.

“If their engagers provide them with benefits and rights that blur the boundaries of their employment status, then the workers become more akin to an employee and they would lose their flexibility which the majority would not want.”

“A lack of protection is part and parcel of their employment status.”

By | 2018-12-14T09:31:37+00:00 April 26th, 2018|Personal Finance|0 Comments

About the Author:

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Felicity is a passionate advocate of simple living. Based in Scotland she was once a crime reporter, before moving on to obtain her degree in History. Felicity now focuses on business and financial journalism.