Boosting Pensions for 'Invisible Workers' Supported by Workplace Statistical Evidence
The Department for Work and Pensions (DWP) has published annual statistics on workplace pension participation and savings trends from 2009 to 2025, shedding light on the current state of pension savings in the UK.
Automatic Enrolment (AE), which automatically enrolls eligible employees into workplace pension schemes, has been highly successful, achieving an 88% participation rate among eligible employees by 2023, up from 55% in 2012. However, AE currently applies mainly to employees with eligible earnings and excludes most self-employed and gig economy workers.
The urgent need for policies to bring lower income, self-employed, and gig economy workers into pension saving was highlighted. To address this, the government and Pensions Commission are focusing on expanding and refining AE, as well as targeting pension contributions more effectively.
Rather than uniformly increasing pension contributions across all income groups, recent expert proposals emphasize raising minimum total pension contributions specifically for middle and higher earners, where reductions in take-home pay are more affordable. This approach aims to enhance pension savings without unduly burdening low-income workers, who already rely substantially on the state pension.
There is advocacy for extending employer pension contributions to a broader range of workers, including those who currently do not contribute themselves. This could help increase participation and savings among lower income and gig economy workers who may struggle to make voluntary contributions.
While AE has not traditionally covered self-employed and gig economy workers, policymakers are engaged in ongoing considerations—though specific policies fully dedicated to these groups remain under development. The government acknowledges the participation gap for these workers compared to employed counterparts and continues to explore approaches to encourage pension saving among them.
The original Pensions Commission recommended a low-cost, state-supported pension scheme (such as Nest) to support private pension saving for hard-to-reach groups, including the self-employed. While AE and Nest have driven participation among employees, efforts to tailor these solutions to independent workers are ongoing.
In addition to these efforts, PensionBee's Invisible Worker campaign highlights that more than a million 'gig' economy workers are not currently paying into a pension. PensionBee is calling for reforms that prioritize simplicity, affordability, and broader eligibility.
Eight-in-ten of all employees, or 23.3 million workers, are saving into a scheme. Despite the success of AE, pension savings rates among 'gig' economy workers and workers who are not eligible for AE remain low, with rates increasing from 28% in 2023 to 33% in 2024. The demand for pensions among workers not auto-enrolled has increased organically between 2023 and 2024.
The proportion of people retiring with defined contribution schemes has increased from 37% (280,000) in 2016-2017 to 48% (390,000) between 2024 and 2025. However, participation rates among employees of 'micro' employers with less than five members of staff are far lower, at 59%.
The freezing of the earnings trigger for Auto Enrolment at £10,000 led to a greater than usual increase in participation. Despite this increase, the statistics do not provide information about pension savings rates among 'gig' economy workers, the participation rates among employees of 'micro' employers in defined contribution schemes, or the savings rates among Pakistani and Bangladeshi workers paying into defined contribution schemes.
Becky O'Connor, Director of Public Affairs at PensionBee, has stated the need for government attention to improve long-term saving among those not currently in the system. The DWP identified a lower than average proportion of Pakistani and Bangladeshi workers paying into workplace schemes, at 68%.
In conclusion, the UK's strategy currently involves building on the success of Automatic Enrolment among employees and refining policies to better include lower income, self-employed, and gig economy workers through targeted contributions, broader employer involvement, and state-supported options. Full statutory coverage for self-employed workers via AE is not yet implemented but is part of ongoing policy discussions to close pension participation gaps.
- To effectively boost pension savings among self-employed and gig economy workers, it's crucial for the government to consider extending employer pension contributions and targeting pension contributions more effectively, as recommended in the current strategy.
- In light of the low pension savings rates among gig economy workers, there is a growing need for simpler, more affordable, and broadly eligible pension solutions, as advocated by PensionBee's Invisible Worker campaign.
