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Providers plan auto-enrolment scheme for self-employed

Royal London and Aviva propose system to default self-employed into randomly assigned provider

Self-employed people should be auto-enroled through their tax returns, according to a new proposal from Royal London and Aviva.

In a report published this morning, the providers attempt to tackle the pensions savings gap among the self-employed by increasing Class 4 National Insurance Contributions, but directing this into a nominated pension instead of the Treasury.

The headline NIC rate would increase by 3 per cent to 12 per cent, but this would be ‘reclaimed’ by having it put into a pension, providing the self-employed paid a matching contribution from their profits.

The profits that would be diverted into the pensions by the self-employed person would be matched by the Government at some level.

Using the annual tax return process for the self-employed, a series of boxes would appear early in the process giving the individual the option to pay the diversions into their existing pension, be defaulted into a randomly assigned approved provider, or opt-out.

It would resemble auto-enrolment in the self-employed individual could not continue their return until they had completed this.

Royal London director of policy Steve Webb said at the launch of the report this morning: “With auto-enrollment my preference used to be that you put the fact that you can opt out on page 64 of the form. In Latin. When we tested it turned out that actually you put people straight back in control right at the top, immediately you say to them that you don’t have to do this…We got more people staying in when we were straight with them.”


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. The last paragraph doesn’t fill me with confidence, I may have to check RL T&C’s again for Latin.

  2. Paolo Buco nel Terreno 5th July 2017 at 4:27 pm

    Only a matter of time before S/E are brought into AE by whatever method is best placed. In the end you cannot just ignore c5 million workers, especially as they are more likely to have less pension savings than employees, so would claim more benefits from the State (which won’t be in a position to pay out to the level needed). Also, on one hand the S/E cry wolf when NI contributions are raised to match employed people, saying they don’t get matching benefits (which I feel they should do if paying the same as employed people), but by the same token should not be allowed to escape the ethos of what AE is all about (provision for future income security). It needs to be fair to all.

  3. Does this mean the end of the opt out option? Also what if the person has a perfectly good PP?

    Anyway collecting through the tax return is a non starter. The self employed have innumerable ways of mitigating tax and understating earnings.

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