Economic insecurity in later life is the most pressing challenge for Britain’s burgeoning self-employed workforce, according to a new report which calls for the introduction of an auto-enrolment pension scheme for solo self employers.
The report, Free Radicals: Britain’s self-employed millions urgently need a new deal, by think tank Demos is commissioned by IPSE, the organisation for self employed people, and also includes a call for greater parental rights for the self employed.
A survey of 1,000 self employed people cited by the report finds 46 per cent of self employed people are “seriously concerned” about their lack of savings for retirement and 38 per cent are “seriously concerned” with current pension provision for the self-employed.
Despite this, self-employment is extremely popular, with 80% stating they are happy with this form of employment and 70% saying they intend to stay in self-employment for the foreseeable future – only 2% of workers state they would consider switching to employee status as soon as possible.
The report proposes 30 policy recommendations across six areas – savings, tax, training, working conditions, the platform economy and welfare. These include: the introduction of an auto-enrolment pension scheme for solo self-employers, with the Government funding contributions that match the employer level of contributions from April 2019; and a new engagers’ tax to help fund an auto-enrolment scheme. Demos says this would initially be levied at 2.5 per cent on a given firm’s annual expenditure on contracted self-employed labour, rising to 5 per cent in 2021 and 7.5 per cent by the end of the Parliament.
Other recommendations include:
Alan Lockey, Demos’s Head of Modern Economy and the report author, said: “The rise of self-employment is one of the biggest changes to the modern economy in the last couple of decades. We need to think pragmatically about whether we should actively encourage it – it could be that it is the British solution for a more flexible, less rigid approach to life and work in the future, as it already is for millions of people. That means we need a new deal to boost security for the self-employed.”