Pensions minister Guy Opperman has confirmed the government plans to auto-enrol the self-employed, while hinting there was “definite scope” to implement Cridland’s midlife MOT.
Speaking at Old Mutual Wealth’s fringe event at the Conservative party conference on 2 October, the minister (pictured) confirmed the plans for the self-employed as previously laid out in the Tory manifesto.
Opperman said rolling out the planned increases to automatic enrolment (AE) was his first priority, but auto-enrolling the self-employed was high on the agenda.
“The proposal without any shadow of a doubt is that we should do this,” he said.
Opperman said he was working with Matthew Taylor, author of the Taylor Review, who had suggested the self-employed should be auto-enrolled into a pension scheme through the self-assessment process.
This meant they would be expected to provide 4% of income towards a pension at the point of providing HMRC with their self-assessment, unless they chose to opt out.
According to Old Mutual Wealth, just 12% of self-employed workers are actively paying into a pension, and a mere 28% believe pensions are the safest way to save.
The minimum auto-enrolment contribution for the employed is currently set at 2% (1% staff, matched by 1% employer). This is set to increase to a minimum of 5% on 6 April 2018 (3% staff, 2% employer) and then to 8% from 6 April 2019 onwards (5% staff, 3% employer).
The pensions minister also said there was “definite scope” for a midlife MOT for both private and public sectors to review the finances of individuals.
The idea of a ‘mid-life MOT’ was put forward in the Cridland Report, which suggested the policy would act as a check-up on a person’s finances, much as someone might receive a check-up from a doctor.
It should be targeted at those aged 50 and above, and would allow people to consider their existing financial and lifestyle plans, as well as provide guidance on where to obtain help in the future.
However, a number of advisers told Retirement Planner they had doubts about the practicalities of the idea, not least because they were concerned about the take-up by the general public.