These are right things to focus on as they represent the key needs of the majority, and addressing these will lead to the biggest positive impact for UK long-term saving. As a result, if there is any focus in the run up to the general election, it's likely to be here.

But this risks ignoring a whole swathe of consumers who are not saving at all. As they are in the minority, and it all seems a bit too hard, they often get side-lined. So, how can we support greater retirement saving among the self-employed?

Tackling it is critical to supporting the long-term financial wellbeing and resilience of millions of UK self-employed workers.

Rather than trying to develop a complex solution, focusing on what matters and keeping things simple could have a material positive impact much more quickly.

Here’s how.

Arguably one of the biggest pensions saving policy successes of living memory has been AE (auto-enrolment) but its success has been – inherently – limited to the employed.

In looking at how to support retirement saving among the self-employed, policymakers have frequently turned to AE for inspiration, proposing some form of equivalent that might have them save automatically into a pension. They have also looked at the potential to use a Lisa if it could be made more accessible.

While both of these are certainly ideas worth exploring, it would most likely take a significant amount of time to design and implement and may not have significant uptake anyway (assuming there is an option to opt out as for the employed under AE).

Parked in the 'too hard to do' bucket

The first thing we need to recognise is that the self-employed are a diverse group in terms of both ability and desire to save. But for many, similar to those employed before AE, they know they should save for retirement and want to, but it is all too complex and so parked in the 'too hard to do' bucket.

So, we know that no one solution is going to work for everyone. But, while we cannot let perfection get in the way of progress, we should try and find what will have the greatest impact, for the majority, in the fastest and simplest way.

If we want to implement something with potential for immediate impact, we need to keep things simple and engage with the self-employed on pension contributions aligned to how they deal with all their finances.

It has to be timely and relevant

Allowing pension contributions to be taken by the self-employed as a tax allowance at the point where they complete and submit their annual accounts puts pension saving squarely in the middle of something that every self-employed worker will have to do – filing accounts – at a time when they are likely already thinking about how to use appropriate tax allowances.

This does not mandate that the self-employed will start more pension saving, but making it more attractive, aligning it to options the employed have anyway and making it timely and relevant is likely to be impactful.

This is entirely consistent with how the employed can take advantage of salary sacrifice, should their scheme allow it. So arguably it is just the fair thing to do to equalise the benefits employed and self-employed can get.

This would improve the overall fairness of our pension and taxation policy and would demonstrate a commitment to encouraging entrepreneurialism and ultimately business and economic growth.

After all that is ultimately what the UK Isa and Mansion House compact were aimed at – encouraging growth in the UK.

A simple idea that could really work

Improving long-term financial wellbeing and resilience in the UK means improving it for all. Addressing the pension gaps between the employed and self-employed is something that we – as an industry, and as a country – cannot afford to keep on the back burner or mired in drawn-out debate.

Allowing pension contributions to be taken by the self-employed as a tax allowance during the accounts filing process leverages an existing touchpoint to unlock new benefits for this important and growing population in the UK. It’s a simple idea that could really work.

This article originally appeared in FT Adviser in May 2024.