The tricky job of enrolling the self-employed into pensions


The estimate from the Citizen’s Advice Bureau that some 460,000 extra workers are currently missing out on auto-enrolment because employers deem them independently self-employed seems reasonable.

When employers conduct a workforce assessment, they generally do so with a cut of data from payroll. They do not ask their finance person for a list of people who are regularly invoicing the organisation for the possibility some are so dependent on the payments of these invoices that they should be reckoned “workers” and subject to the assessment.

This is particularly important for the many employers who claim to employ no-one but still submit trading accounts. These firms are typically paying regular bills submitted by self-employed individuals, if only to their book-keepers!


This state of affairs is problematic and needs clarification. Ros Altmann is currently running an informal consultation to find areas where simplification is needed to make auto-enrolment easier.

Clearly this is an area where simplification would be most helpful.

But for the self-employed person the situation is anything but simple. Not pushing for a pension contribution is to deny yourself your rights, but most contractors who are dependent on one employer are frightened to death of losing the fragile contract. Could it be proved , following the pension conversation, that the contract was lost because of it? The self-employed have few rights and the right to a pension contribution is very far from the top of the list.

The Government struggles to find a definition of a worker that properly covers the contractor.


So the question for Ros Altmann is whether to press their rights – and cause a lot of trouble, or to drop their rights by maintaining the current state of affairs.

I am unsure about what is the best way forward. I am not used to sit on the fence but while I don’t see the current situation as satisfactory, I think there could be a lot of harm done by forcing employers to make an invidious choice.

This is not an argument for compulsion (which is where these conversations usually lead).  Making it compulsory on the employer to include all self-employed contractors on the auto-enrolment assessment may be helpful to the Treasury – who have long been wary of the bogus self-employment contract. But in the process of forcing the company’s hand, it risks driving the self-employed into unemployed at a time when the unemployment statistics are crucial to the Government’s reason to be.


So it’s going to be very interesting to see how this conversation turns out.

What may be best is that we have another consultation (we haven’t had one for weeks). A consultation on what to do about self-employed pension contributions is long overdue.

My personal feeling is that we need to introduce a voluntary class of national insurance contributions from which the self-employed could opt-out, through an act of extraordinary complex tax- shenanigans which would need to be signed in triplicate by any advisor (ensuring that there was no incitement).

Contracting out of these higher rate self employed national contributions would then become as onerous as opting out of employer contributions.

With a Government match on contributions , it might even become a popular thing for the self-employed to stay in.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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4 Responses to The tricky job of enrolling the self-employed into pensions

  1. Gerry Flynn says:

    What about the self employed person who is contracted through his own Ltd company. He is an employee of that company and the invoice is paid to that company, there is no way he/she should be auto enrolled.

  2. Alan Chaplin says:

    I suspect pensions are the least of the issues we should be tackling re self employment … NI in general, undeclared payment/income, lack of general employment protection e.g. minimum wage, maternity leave, sick leave. I would put those above missing out on employer pension contributions. For now, I would suggest leave it alone until 2018 when we have got most employers/employees in and then have a look at the self employment rules including pensions rather than how pensions fit into the current regime…

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  3. Gerry Flynn says:

    He may be a director of his Ltd company but he is NOT employed by the contracting employer as such, he is employed for his skills to provide a service.

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