As a result, the committee has recommended that the DWP and the Treasury set a date to trial ways to default self-employed people into pension saving and consult on the proposal to increase national insurance paid by these individuals, giving them the option to have these additional contributions paid into a pension, if they also contribute.
In relation to gig economy workers, the MPs are “concerned” that individuals are “missing out on their right to build up a pension through auto-enrolment because the company they work for classes them as self-employed”.
The committee heard from the Pensions Regulator, which is facing “legal complexities and routine challenges from employers” in this area, despite new guidance on employment status issued in July 2022 by the Department for Business Energy and Industrial Strategy.
The MPs are thus recommending the government to “bring forward its employment bill for parliamentary scrutiny as soon as possible, to increase the legal protection available to people in low-paid work and the gig economy”.
In the meantime, the DWP should work with the regulator “to estimate the extent of the problem and what additional resources or powers TPR needs to be able to ensure employers in the sector comply with their auto-enrolment duties”, the report added.
New office for pension objectives
After identifying the challenges faced by current savers, the committee concluded there is “a need to forge a consensus on the future direction, including employers, trade unions, the pensions industry and the wider public”, which should be achieved through “cross-government commitment to develop a plan and build this consensus”.
Stopping short of recommending a new pensions commission is set up, the MPs urged the government to set up a new office tasked with building and maintaining an evidence base, which is needed in areas such as self-employed and pension sharing in divorce.
This office should also be in charge of “explaining the trade-offs involved in different policies”, and “reporting regularly to parliament on progress in meeting objectives, in particular relating to retirement adequacy and the gender pensions gap”.
Timms said: “With many struggling through a cost of living crisis, now is not the time to ask people to find extra money for their pensions, but this does not mean that the new team of DWP ministers can sit on their hands and ignore the dark clouds gathering on the horizon for a future generation of pensioners.
“Without action to prepare the ground now, many people will feel the reality of this coming catastrophe in their later years.”
maria.espadinha@ft.com, amy.austin@ft.com
