Pensions Expert editor Nick Reeve looks at a new report on different countries’ pension saving systems for ‘gig’ workers, and asks whether there are lessons to be learned at home as the Pensions Commission continues to explore the adequacy issue.
If you’ve ever caught a taxi or ordered a takeaway through app-based services such as Uber, Bolt, Just Eat, or Deliveroo, the chances are the person who delivered that service was part of the UK’s ‘gig economy’.
These transient, short-term, task-based jobs can be great for people seeking flexibility in employment or looking for a way to top up their income. However, increasingly, these are becoming full-time jobs.
That creates an obvious problem when it comes to saving for retirement, as for many gig workers, there simply isn’t a way to put any money aside for the future in the way that full-time employees can through a workplace pension. The past few years have brought pension options for Uber and Bolt drivers through partnerships with Now Pensions and Aviva respectively, but for the majority, it’s simply sent straight to their bank account.
New research published this week by the Coller Pensions Institute is looking at this issue on a global scale. The populations of many emerging and developing economies are predominantly “informal workers”, as the research puts it, with no financial infrastructure around them to help them save. This presents problems, as these people may fall back on the state or their families in old age, reducing their independence, but it also cuts off a potential source of long-term investment for these economies.
Countries such as Mexico, Rwanda and India have seen considerable success in supporting informal workers to save through dedicated savings systems. Rwanda, for example, introduced its Ejo Heza programme in 2018 with contributions matched by the government. It also included services such as life and funeral insurance, and has some flexibilities for how savers use their money, such as for housing and education.
With the Pensions Commission working away at solutions to the UK’s adequacy problem, this report feels timely. While national contexts are very different, there must be ways in which these systems can help us support some of those in the UK most at risk of poverty in retirement.
Next week, I will be speaking to the Coller Pensions Institute’s David Pinkus and Fiona Reynolds about the research and what lessons we might learn in the UK to help support our own gig worker population.
Nick Reeve is editor of Pensions Expert.
