There are two schools of thought on the self-employed, the first is expressed by the Society of Pension Professionals which is to include them in workplace pensions.
The second is from Steve Thomas of Prospect Union , which asks for them to be left alone. I have published Steve’s thoughts, inspired no doubt by the thinking of Prospect’s Pension team led by Neil Walsh. They are a force to be reckoned with and they say that there should be no requirement for the self-employed to be in workplace pensions.
Here is Corporate Adviser’s explanation of the SPP’s position
You can read the SPP’s report here
But the gist of their position is stated in the summary and assumes that the self-employed are the same as any other folk and need auto-enrolment
This paper seeks to move that conversation beyond diagnosis towards practical solutions. If AE was the defining pensions reform of the last generation, ensuring it does not leave behind the millions who work for themselves should be one of the defining challenges of the next.
Nest has had a workplace pension which is open to any self-employed worker in the UK to join and contribute to. If you don’t believe me, this link takes you to the joining details.
Simple and an excellent entry to a pension, Nest’s self-employed “sign up” option is under-promoted and under used. It needs to be improved for self-employed saving but this could be done.
Martin Lewis, who advertises self-employed personal pensions as efficient and effective does not seem to know Nest’s option exists.
The trouble is not that the solution isn’t there. Reading the conclusion that the SPP comes up with tells me that technology is there to make Nest the self-employed default position pretty well immediately.
The problem is that the self-employed are not worried about under-saving, they are (for the most part) wanting to get on with it , on their own.
I think we can make pensions like Nest more accessible and more popular and I hope that the SPP’s report will be a useful spur for the Pensions Commission to help. But to suppose that some kind of mandation is required (even only a nudge) is too much for me as it is for Prospect.
I dont think your suggestion that the spp paper, “assumes that the self-employed are the same as any other folk and need auto-enrolment” is an accurate reflection of their paper at all.
They state: “the self-employed are, however, far from a homogeneous group.” “self-employed people face a fundamentally different environment.” and more importantly they offer two solutions which like AE are inertia based, and six solutions that are not like AE (not inertia based). I found it a very useful contribution to what I’m sure will be an ongoing debate until the Pensions Commission report, and probably beyond.
Agreed!
In the states, certain retirement savings programs have unique “catch-up” provisions – where those whose income varies from year to year can load up in years with significant earnings.
In a 403(b) plan, the phrase “lookback period” or “lookback rule” typically refers to one of three specific IRS regulatory contexts: determining employee eligibility, calculating the 15-year special catch-up contribution.
A distinctive feature of some 403(b) plans is the 15-year lifetime catch-up provision, which allows employees with 15+ years of service at a qualified organization to contribute up to an extra $3,000 per year (up to a $15,000 lifetime max).
To determine how much extra a participant can contribute, the plan must look back at the employee’s entire prior history with that specific employer. The allowed catch-up is capped based on a complex lifetime math check: $5,000 times the employee’s total years of service, minus all elective deferrals the employee made in all prior years to that employer’s plans.
You usually need 35 qualifying years of National Insurance contributions to get the full State Pension in the UK. If you do not have enough, you can pay to fill gaps in your record to boost how much you get – even if you’re already getting your State Pension.
http://www.moneyhelper.org.uk/en/pensions-and-retirement/state-pension/voluntary-national-insurance-contributions-and-the-state-pension