Two months into his new role, the Treasury’s John Glen reflects on the importance of helping the self-employed save for their retirement.
Pension freedoms and automatic enrolment have been great success stories, the latter helping more than 9m people to start saving or save more into a workplace pension.
Later this month we are bringing together a range of people from the pensions industry and fintech firms for a ‘tech sprint’
The long-term decline in pension participation among employees has been reversed, and, for the first time, just as many women are saving into a pension as men.
Pension freedoms have fundamentally changed how people consider their retirement options. The government believes it is right that individuals are trusted with their own hard-earned savings by offering them more freedom and choice when they are making decisions about their retirement.
Since the freedoms were introduced they have proved to be very popular, with individuals accessing over £15bn through more than 3.2m payments.
The next big step for auto-enrolment will be the increases to contributions for both employees and employers scheduled for April 2018 and 2019.
These are hugely important and will boost the amount that people are saving. As the Department for Work and Pensions noted in its review of auto-enrolment in December, we will be carefully monitoring the effects of these rate rises for employers, employees and taxpayers, to help us decide how to build on this success.
Despite the great strides auto-enrolment has made, what has been most evident to me since I joined the Treasury in January is that self-employed people are still undersaving for their retirement. This is a real concern.
The DWP concluded in December that it will not be as simple as extending the auto-enrolment mechanism. After all, they have no employer to enrol them. So, we are taking action to find an innovative alternative.
‘Tech sprint’ to help improve pensions
Technology is changing the way self-employed people do business. It will also offer new ways to help people manage their businesses and finances. This presents an opportunity to try new approaches to help self-employed people with pension saving.
Later this month, in collaboration with the Association of British Insurers and the DWP, we are bringing together a range of people from the pensions industry and fintech firms for a ‘tech sprint’.
The participants will use their different skills, experiences and expertise to develop innovative ideas that could help the self-employed save for retirement.
The tech sprint is just one of the many ways in which we are working with industry to continuously improve the British pensions landscape and ensure more people can save for the retirement that they want.
John Glen is economic secretary to the Treasury and City minister
