Yahoo Finance 'Shockingly lethargic' pension reforms risk creating lost generation of gig workers
“Shockingly lethargic” pension reforms risk creating a lost generation of workers who simply will be unable to afford to retire.
Millions of people who work in the gig economy and millennials are saving nowhere near enough to secure a comfortable life after their careers end.
And, while proposals to lower the age for automatic enrolment in workplace pensions from 22 to 18, those plans will not be introduced until the mid-2020s.
MORE: 1 in 8 workers thinking of quitting their pension scheme
Steve Webb, a former pension minister under the Coalition government, and now director of policy at Royal London, said the government’s review contained some “great ideas” but “the proposed pace of change is shockingly lethargic”.
He said: “Talking about having reforms in place by the mid 2020s risks leaving a whole generation of workers behind.
“Those who never got to join a final salary pension and who have only recently come into pensions through automatic enrolment need urgent action to help them build up a decent pension pot.
“This pedestrian pace of reform risks creating a ‘lost generation’ of people in their late 40s and 50s who will simply be unable to afford to retire.”
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According to the Pension and Lifetime Savings Association, the number of self-employed people putting money into a pension fell from 1.1 million in 2001 to just 380,000 in 2015.
An additional 900,000 workers will be pulled into a pension scheme once the age is lowered for automatic enrolment, says the Department of Work and Pensions.
It also plans to scrap the £5,876 minimum earnings level to qualify for contributions.
But with about 38% of people – that’s about 12 million workers – believed not to be saving enough, the challenge is immense.
There are about 5 million people now working in the gig economy, many of them will not be enroled in any workplace pension scheme as they are considered to self-employed.
Those juggling several jobs and others earning less than £10,000 have not considered in the latest reforms – due come into effect next April.
MORE: 5 million gig economy workers ‘missing out on £100,000 pension pot’
Research from financial adviser Zurich shows a third of gig workers held at least two jobs, with one in seven juggling three or more, with men more likely to have multiple jobs than women.
Frances O’Grady, general secretary of the TUC, said: “The review has missed a vital opportunity to bring more low-paid workers into workplace pensions.
“If the government does not fix this problem, pensioner poverty will increase.”
