Pensions: Low-income and Self-employed Workers

Lord Palmer of Childs Hill Excerpts

Wednesday 23rd July 2025 Lords Chamber

[Baroness Anderson of Stoke-on-Trent (Lab)]

The noble Earl raises a very interesting point and I am genuinely not sure of the answer. If he will forgive me, I will write to him. With regard to the self-employed, the DWP is currently working with Nest Insight and other partners to test potential solutions to encourage contributions from the self-employed into pensions, including nudges and utilising digital systems that many self-employed people already use. I think that will have an impact on the creative sector, but I will write to the noble Earl on the detail of his question.

[Lord Palmer of Childs Hill (LD)]

My Lords—

[Lord Howell of Guildford (Con)]

My Lords—

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[Lord Palmer of Childs Hill (LD)]

My Lords, the Minister is quite right to talk about the success of automatic enrolment but, as she touched on, the pension contributions of the self-employed raise alarm. Could the Government think of ways of increasing this, perhaps using the tax return process as an opportunity to get self-employed people started in pension saving? The challenge is that, whereas employees tend to have fairly stable incomes, the self-employed can have quite lumpy incomes, so it is hard for them to commit to a regular level of pension saving. Could the Government look into ways of making pension saving easier for people running their own business and the self-employed, who may find that they can pay into a pension in sporadic chunks rather than on a regular basis?

[Baroness Anderson of Stoke-on-Trent (Lab)]

The noble Lord is absolutely right. One of the challenges we have with the self-employed and those who have multiple jobs of a lower income is around how we can encourage them, and auto-enrolment is not the right vehicle for them. There are two things the Government are doing. First, it is part of the remit of the forthcoming Pensions Commission to see what additional support can be put in place for the self-employed. Secondly, in the interim, the DWP is working with Nest Insight on how we can actively encourage new schemes that make it easier for the self-employed to participate in pensions. We are talking about cultural issues, using AI and other tools that the self-employed might already use in their workplaces to encourage them to save. We have undertaken a scheme with Nest, and we are looking for partners to roll it out to make sure it is credible on a national scale.