Gig economy workers could become eligible for auto-enrolment pensions as result of a consultation launched by the government in response to the Taylor Review.
The Taylor Review of Modern Working Practices - led by RSA chief executive Matthew Taylor - was published in July 2017 and included 53 recommendations across a range of areas including the implications of new forms of work, the rise of digital platforms and the impact of new working models on employee and worker rights.
In its response published yesterday, the government accepted nearly all of Taylor's recommendations and launched four consultations on key areas covered by the review - including a consultation on employment status.
This consultation will look at how to increase clarity in the employment status framework, especially among those designated as ‘workers', the so-called gig economy participants whose status lies somewhere between ‘employee' and ‘self-employed'.
Any redefinition of a ‘worker' could have an impact on pensions as those individuals classified as such are not currently eligible for auto-enrolment.
Research conducted by Zurich and the Pensions Policy Institute last year found extending auto-enrolment (AE) to workers in the gig economy could grant them a lump sum of £75,600 at retirement.
Pensions and Lifetime Savings Association policy lead for defined contribution Tim Gosling explained: "By consulting on whether to redraw the line on who is deemed self-employed and who is a worker, it offers the prospect that some gig economy workers may in future benefit from a workplace pension. This is important and welcome as it will help to prevent employers wrongly categorising people as self-employed and therefore not eligible to be enrolled into a workplace pension.
"The announcement will not, however, help solve the problem of how to involve the traditional self-employed in workplace pension saving. The government acknowledges that more needs to be done and has committed to testing difference solutions for the self-employed over the coming year. We will continue to work closely with government as well as the rest of the industry to look at options which will help this important and growing demographic to tackle the retirement savings challenge."
Royal London director of policy Sir Steve Webb added: "It is welcome that the government is planning to take action on some of the ways in which gig economy workers can lose out."
However Webb said, despite the Taylor Report recommendations, the government response offered "little hope" for improving the pensions of the self-employed.
He continued: "The government's automatic enrolment review merely proposed some further research and testing on pensions and the self-employed, which is not up to the urgency of the problem. Pension membership among employed workers has soared because of automatic enrolment, but it remains shockingly low for the self-employed. It is very worrying that this issue has again been kicked ‘into the long grass', meaning that millions of self-employed people face an insecure retirement'.
This comes as latest data from the Office of National Statistics (ONS) revealed a large proportion of self-employed people have no pension.
The data found that 45% of 35-54-year-old self-employed people, and 30% of those self-employed workers aged 55 and above, have no pension savings.
The ONS said 15.1% of the total workforce are now self-employed, accounting for 4.8 million people in 2017, compared with 3.3 million in 2001.