Give one-person firms pension auto-enrolment, say MPs

People who work for themselves should get pension auto-enrolment to help them save for retirement, an influential panel of MPs has declared.

But it is currently "not clear that the government has a clear strategy or timetable for doing so," said the Treasury Select Committee after probing how to help hard-pressed households.

So the need for the government to explore using self-assessment and NICs to auto-enrol the self-employed into the system is "urgent", the committee said.

"The Treasury should keep an open mind towards doing so [adding the self-employed to the auto-enrolment system]," the MPs also wrote in their unanimously agreed report.

They added: "The possibility should be analysed as part of the next automatic enrolment review."

Policy wonks have previously recommended bringing the self-employed into auto-enrolment, under which a percentage of a worker's pay is automatically put into a pension on their payday.

Although the self-employed not having an employer was then considered a practical barrier, the MPs have now heard suggestions that a tax return could be used as the mechanism to put away up to 5% of self-employed earnings -- assuming the taxpayer gives their permission.

The MPs also heard that excluding independent workers from auto-enrolment has “exacerbated the incentives for employers to create pseudo-self-employment roles, without the degree of autonomy normally associated with self-employment, in order to benefit from lower taxes.”