Pensions have a PR problem with their inaccessible, complicated language and cumbersome paperwork helping to create a self-employed savings crisis, a report by IPSE (the Association of Independent Professionals and the Self-Employed) has found.
To mark Saturday’s Pensions Awareness Day, IPSE wants to see both the Government and the pensions industry take steps to overcome the pensions PR problem and improve the savings prospects of nearly five million self-employed people.
The pensions crisis threatens to leave many self-employed people facing pensioner poverty later in life. To avert this, the report, ‘How to solve the self-employed pensions crisis’, makes a number of key recommendations:
- Pension products should be more user-friendly and engaging. The terms of a policy must be clearly and accessibly set out with understandable and engaging language.
- Deliver the pensions dashboard. Access to real-time, transparent information on an individual’s pension pot/pots will allow them to work out how well prepared they are for later life and, where necessary, make improvements. For people who are disengaged, having access to this information could encourage them to start planning properly for their retirement.
- Pension providers should develop smartphone apps. This would provide a user-friendly, easy-to-access platform to help savers understand the value of their current pot and its projected worth in the future.
Jonathan Lima-Matthews, IPSE’s Senior Policy Adviser, commented: “With just 31 per cent of the self-employed paying into a pension, there is a crisis hanging over the sector and we must take action to avert it. Our landmark report found one of the key reasons for low saving rates among the self-employed is the pensions industry’s PR problem.
“Despite their best intentions, the pensions industry has a lot to do to bring the 3.3 million self-employed people not saving into a pension back into the fold, and a good starting point is improving communications.
“Self-employed people often feel bewildered by pensions options that are inaccessible and loaded with jargon. This can often put them off engaging with pensions altogether. Pensions Awareness Day is a great initiative to engage the self-employed on this essential issue, and part of a vital effort to avert the looming crisis.
“Last week the Government withdrew its involvement in the pensions dashboard. This was despite our report finding that 51 per cent of the self-employed trust Government websites as a source of guidance – clear showing the crucial role the Government can play in improving saving levels among the self-employed.
“The recent growth in self-employment has been a revelation, but now we need to provide them with long-term financial security and defuse the ticking pensions timebomb.”
Click here to read the full report.
IPSE, the Association of Independent Professionals and the Self-Employed, is the representative body for the UK’s self-employed community, including freelancers, contractors, consultants and independent professionals.