UK pensions crisis continues to grow with gig economy
The UK continues to sleepwalk into a pensions crisis due to the lack of retirement savings by millions of gig economy workers, warns leading HR and payroll provider MHR ahead of Pension Awareness Day this Sunday.
The Nottingham-based company says workers in the gig economy, estimated by the TUC to number 4.7 million, risk having no pension and is continuing to call on the Government to expand the automatic enrolment for workplace pensions to include those working in the gig economy.
Neil Tonks, Legislation Manager at MHR comments: “Despite attracting criticism for the way unethical employers are able to try and sidestep employment rights such as holiday and sick pay, the gig economy continues to expand rapidly. For its supporters it delivers a flexible route into work and provides parents and carers with greater freedom to fit work around their lifestyle and caring responsibilities.
“Worryingly, however, gig workers often don’t have access to a workplace pension because they’re considered self-employed. In many cases they also choose not to put money aside into a private pension, possibly because they can’t afford to do so.
“Unless action is taken, we’ll continue to sleepwalk into a pensions crisis whereby a generation of workers, who perhaps require security the most, are left in a vulnerable position. Trapped in low-paid work and not saving for the future, they risk being forced to work in their retirement years because they have no private pension and haven’t accrued enough Qualifying Years on their National Insurance record to claim the full state pension.
“This situation has been known about for some time but despite being included in the Taylor Report into modern working practices and being highlighted by the Work and Pensions committee of MPs, no concrete steps have been taken to address it.
He adds: “The lack of pension provision for the growing number of workers in the gig economy is a real concern which needs addressing quickly. While many people see gig-working as a short-term option and assume they’ll accumulate a pension at some point in their career, the reality is that many get stuck in a rut and may work in this type of employment for longer than they initially envisaged, leaving them facing an insecure future.
“There are a number of possible options, such as expanding auto-enrolment to include the gig economy, or introducing a new ‘sidecar’ scheme for self-employed workers which reflects their variable income and allows them to put money aside for their pension. Implementation of these would be a big help in enabling gig economy workers, and other self-employed people, to build up a pot for their retirement and long-term security. They contribute a lot to the UK economy, so surely they deserve a decent retirement when they reach the end of their working lives?”