Jim Armitage: Pensions provision is the next big question for the gig economy

A question left unanswered in Matthew Taylor’s musings on the gig economy bothers me. Who is going to pay for the army of Deliveroo and Uber drivers’ food, drink and housing when they get old?

Time was when the country planned funding for its elderly on the premise that many had at least some private pension provision from their employer schemes.

But, as increasing numbers of us fall into the gig economy and self-employment, where pension plans are largely non-existent — that pot of cash is dwindling rapidly.

Taylor reports that only 13% of self-employed people save for their pensions, dropping to 4.2% for those under 34. That compares with 50% of employees.

Yet despite acknowledging this yawning chasm of difference, Taylor’s report offers barely any solid instruction on what the Government should do about it, beyond a few vague suggestions.

Surely, while we’re rethinking the future shape of work, pensions should be front and centre in the debate.

We need action now, just as we need to clamp down on the abuses of “dependent contractors” employment rights and pay. Indeed, company pensions should be treated as deferred pay, not just some kind of perk.

Doubtless the directors of gig economy companies sorted theirs out long ago.

Aberdeen Asset Management’s head of retirement savings Gregg McClymont points out today that there is no reason contributory pensions offered by decent companies for the past 100 years can’t be done by gig economy employers too. Why didn’t Taylor insist the likes of Deliveroo chip in for auto-enrolment pensions like other companies have to?

As ever, nobody wants to deal with the pensions time bomb.

We shouldn’t be too surprised. We’ve been here recently with National Insurance, where the rising numbers of self-employed — who pay lower NI contributions — is creating a long-term, dangerous shortfall in the amount the Treasury has to spend on state pensions. Chancellor Philip Hammond tried to address the issue in his last Budget by getting the self-employed to pay more NI, only to be slapped down by Theresa May for fear of a voter backlash.

Few of us ever want to pay tax, or save for our old age. But it needs to be done, and requires governments and their advisers to make sure we do it.

A word of caution to those considering themselves experts in catching falling knives. Despite Carillion’s continuing share-price collapse, few of the short-sellers who correctly predicted its crisis have yet cashed in. The clever money thinks it ain’t over yet.