Workers in the gig economy could be missing out on £180m of employer pension contributions

Commenting on the joint report by Parliament’s Work and Pension and Business Committees on self-employment and the gig economy which recommends that those employed in the gig economy be given “worker status by default” Adrian Boulding, Director of Policy, at NOW: Pensions said:

“Giving those employed in the gig economy worker status will mean that a greater proportion will have the opportunity to save into a workplace pension helping to improve their quality of life in retirement.

“Currently, these 1.3 million* workers have few rights and are entirely excluded from the auto enrolment programme due to their self-employed status.”

NOW: Pensions calculates that those employed in the gig economy could be missing out on £182m of employer pensions contributions annually, calculated at the auto enrolment 3% rate that becomes the minimum for employed workers in April 2019.

Adrian explains: “For a full-time worker in the gig economy, active for 30 to 40 hours a week and earning a typical £10 per hour, they would gain between £300 and £400 a year of pension contributions from their employers.”

However, the research undertaken by CIPD early in 2017 to support the Government commissioned review of the gig economy found that full time gig workers are the minority. Three out of every five have a traditional job as well, and are simply using their gig earnings as a top us.

Adrian continues: “Part-timers in the gig economy will find the auto enrolment rules are stacked against them. They would need to earn £10,000 a year at their gig job to get auto enrolled, and the rule that excludes the first £5,876 of annual earnings from pension contributions will be applied twice, by both their traditional job and their gig work. Not only that but, as one in five gig workers have been in their current job for less than three months, their employer can postpone paying pension contributions until they reach that point.”

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Notes to editors
*Chartered Institute of Personnel and Development (CIPD) estimate.

For further information:

Amy Mankelow

NOW: Pensions

Tel: 07887 604640 / 0203 948 9236

amy.mankelow@nowpensions.com

 

NOW: Pensions www.nowpensions.com @nowpensions

NOW: Pensions is one of the UK’s largest workplace pension providers with over a million members and tens of thousands of employers from a wide range of sectors. A subsidiary of one of Europe’s largest pension funds, Danish pension scheme ATP, NOW: Pensions entered the UK market in 2011 with a simple and cost effective workplace pension designed specifically with the auto enrolment market in mind.

Over a short period of time, NOW: Pensions has established itself as a respected and credible player in the UK workplace pensions market attracting thousands of employers and hundreds of thousands of members. Joining the team at such a crucial time… — Jocelyn Blackwell, Founder of Dunnett Shaw and Raising Standards in Pensions Administration
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…We pride ourselves on our abilities to make the perfect match for both clients and workers. Our decision to appoint NOW: Pensions came as a result of wanting a quality workplace pension scheme that is structured, simple and easy for us to… — Ian Naylor, Legal Director of Randstad
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