We know them as Hermes, they like us to know them as Evri – (as in Evri-where) and the courier firm has done a deal with 12,000 of its 30,000 couriers granting them “self-employed +” status.
Yesterday, the 12,000 couriers who have opted into the range of benefits that “+” entitles to them, got news of the heralded £7m injection of company resources into “pensions”. Evri’s commitment is to treat those on their “self-employed +” contracts, as workers. Meanwhile the 18,000 couriers who choose to be considered purely self -employed, will not be getting a pension, even if their work practices are the same as their colleagues who do.
The concept reintroduces the concept of “targeted pensions”, something that was prevalent before auto-enrolment came along, where human resources departments argued that the people who got a pension , were the people who asked for them. Taken to an extreme example, Kingfisher offered all staff an opt-in to a DB pension at a 5% employee contribution or the alternative of a “bare Comp” where the employee took home more by being a member of a contracted out DC plan where the employer paid the “bare minimum”. Unsurprisingly , staff opted for the pension scheme that improved their take home (but which barely covered the SERPS given up). It was a marketing triumph for the Kingfisher group but produced in the Kingfisher Retirement Trust what Unite once called “the worst DC pension scheme in the country”.
And here is the problem where funded DC pensions are being provided for low-earning workers whose status is determined by marginal decisions about the nature of employment. Too often workers find themselves financially excluded (whether from a DB scheme, SERPS or even AE minimum contributions) because of cost of living considerations. 18,000 Evri- workers are not in a workplace pension because they have deemed themselves ineligible by rejecting “self-employed +”.
In March, Pension Expert reported that 20,000 Evri workers would be enrolled, but this either over-estimated numbers in self-employed + at the time or assumed a surge in interest which clearly hasn’t happened. Either way, enrolling 12,— out of 30,000 workers does not look like a win when opt-out levels in general are less than 10%.
But for 12,000 workers who have opted to call themselves “workers” for auto-enrolment purposes, there is now auto-enrolment into a Smart Pension. The eligible couriers will be enrolled into the Smart Pension Master Trust by the end of 2022.
Well done Smart for winning the contract, but worries persist that like NOW, Smart operates on a net-pay not relief at source basis meaning that Evri-workers who contribute a minimum of 5% of their earnings to Smart but will only receive savings incentives if they pay income tax. By comparison, choosing Nest or People’s Pension would where relief at source is available, would mean Evri-worker would get 25% of their contribution paid for by the HMRC – whether these workers earned over the income tax threshold or not.
There are compensating factors , Smart has great technology, does offer superior at retirement facilities through Smart Retire and provides other financial wellbeing benefits. Unlike NOW (but like Nest and People’s) it does offer a Sharia fund for Islamic workers. But I wonder if these will outweigh the extra cash flow cost to low earning workers till net pay compensation kicks in in 2025.
The gig economy is being dragged kicking and screaming into a pension inclusive world. Congratulations to the GMB and ADCU for persistently arguing for the right for the self-employed worker to get a pension contribution.
Well done too to Pension Expert’s Alex Janiaud, Ben Mercer and now Calum Kapoor for reporting on this.
We wait to see whether Deliveroo, who wriggled out of AE in 2018 will be brought back to the table or whether Contractors for Justice will win their campaign to get pensions for Purple Bricks self-employed workers.
I remain dubious about Evri’s “self-employed +” offer which reminds me of the “targeted pensions” nonsense of KRT and others. Pensions need an opt-out not an opt-in and organisations who develop artificial constructs to appease regulators and minimise liabilities to shareholders, are walking the line.