Policymakers should consider successful efforts in other countries to bring “informal” workers into pension saving as part of the effort to address the global adequacy problem, according to major new research.
A report by the Coller Pensions Institute and D3P Global has listed 20 recommendations for improving access to pension savings for ‘gig’ workers, who work short-term flexible jobs.
The institute’s analysis indicates that “informal” workers – including market traders, taxi drivers, and domestic help workers – now make up more than half (58%) of the global labour force.
“Unless pension systems adapt to engage informal workers, today’s slow-burn problem will become tomorrow’s crisis.”
Fiona Reynolds, Coller Pensions Institute
However, less than 1% of this population contributes to a pension, with 2.2 billion people now facing poverty in old age as a result.
The institute warned that this presented a “time bomb” for economies as it meant less money in long-term investment and a greater reliance on state or family support in the future.
Work needed to avoid ‘crisis’
Fiona Reynolds, president of the Coller Pensions Institute, explained: “Population ageing is steadily increasing the pressure on pension systems, yet millions of informal workers remain excluded.
“Unless pension systems adapt to engage informal workers – particularly women, who are over-represented and under-protected – today’s slow-burn problem will become tomorrow’s crisis.”
The report sets out a range of measures that policymakers can consider to increase pension coverage among gig workers. These include upfront incentive contributions from employers or governments, “second generation” auto-enrolment arrangements, and targeted programmes to ensure those who need support most are prioritised.
Inspiration was drawn from studies of savings programmes in 11 countries, including India, Malaysia, Mexico, Ghana and Nigeria.
“We have the tools and insights – now we need political will, funding, and coordination to bring fair pension coverage within reach for all.”
David Pinkus, Coller Pensions Institute
The report also emphasises the need for solutions designed specifically for gig workers, arguing that policymakers should not try to “replicate a formal worker model”.
It states: “Matching and flat-rate incentives are essential if informal sector workers are to be persuaded in significant numbers to use pensions to boost income in old age.”
Lessons for the UK
While the analysis is aimed at emerging economies where informal workers make up a greater proportion of the overall population, it comes as the UK’s Pensions Commission is exploring ways to address inadequacies in the country’s savings system – including for self-employed and gig workers.
It is estimated that one in six adults in the UK has a ‘gig’ job, with an estimated 1.7 million people having “gig jobs”, according to analysis by job website StandOutCV.
Separate research from PensionBee, published last year, claimed that more than one million gig workers in the UK cannot afford to save into a pension.
Some progress has been made in recent years to support drivers employed through ride-hailing apps such as Uber and Bolt. In 2021, Uber struck a deal with Now Pensions to provide pensions to its drivers, while Aviva set up a similar arrangement for Bolt in 2024.
Self-employed participation in pension saving has declined significantly, according to data from the Institute for Fiscal Studies (IFS). The IFS has recommended using the self-assessment tax system to help self-employed people into pension saving.
Nest Insight has proposed options such as “autosave”, an opt-in approach, to help self-employed people begin saving for retirement “without reducing choice or autonomy”.
David Pinkus, director at the Coller Pensions Institute, said policymakers “cannot afford” to ignore informal workers.
“Well-designed funded pension systems, under the right enabling conditions, can also support long-term economic growth, mobilise domestic savings, and therefore reduce reliance on international aid,” he said. “We have the tools and insights – now we need political will, funding, and coordination to bring fair pension coverage within reach for all.”
