The Pensions Regulator (TPR) has called on gig economy companies based in the UK to offer workplace pensions to their staff now, rather than waiting until they are required to do so by law.
Currently, self-employed people – as most operating in the gig economy are – are not eligible for auto-enrollment into a workplace pension scheme.
This call comes following Uber’s decision to transition its drivers into ‘workers’, a quirk of British law that makes individuals eligible for a minimum hourly wage, holiday pay, and, of course, employer pension contributions.
Uber made this move after a landmark decision by the UK’s Supreme Court that upheld a ruling against the ride-hailing company. The court called on Uber to protect its workers and rejected arguments that it was only acting as a booking agent for its drivers.
Since Uber’s U-turn, other gig companies have followed suit. For instance, in late April, food delivery company JustEat announced it was also turning its self-employed riders into workers, thereby entitling them to a workplace pension, among other benefits.
As reported by the Financial Times, TPR’s chief executive Charles Counsell said: “I am going to call on other organizations in the gig economy to start to recognize that the people who work for them are workers and should be eligible for a pension.
“This is all about helping people, working in the economy, to have a decent standard of living in retirement.
“I really encourage those in the gig economy to take that stance and to start putting their workers into pensions, and let’s not deal with it on a case-by-case basis.”
UK pensions in a post-pandemic world
This call regarding the gig economy comes simultaneously with TPR laying out its three-year corporate plan to help support savers through the economic uncertainty that is expected following the COVID-19 crisis.
Counsell said: “The landscape ahead is both exciting and challenging and we are determined to embrace ever more change: from the ongoing shift to defined contribution (DC) saving and market consolidation to the emergence of new technologies and the impact of climate change on trustee and employer decision making.”
The plan centers around five main themes – security, value for money, scrutiny of decisions made on behalf of savers, embracing innovation and bold and effective regulation.
Innovation is a particularly interesting focus as the very traditional UK pension’s sector has increasingly faced technological disruption from the likes of PensionBee, which recently listed on the London Stock Exchange.
TPR’s commitment to innovation includes ensuring that the market keeps pace with consumer needs. It will do this by encouraging new scheme models and supporting the development of the UK government’s digital pensions dashboard initiative to give savers easy visibility of their pension pot.