NEST Insight, the research unit of the £3.8 billion ($5 billion) U.K. multiemployer defined contribution plan National Employment Savings Trust, London, will test different approaches to retirement saving for the self-employed workers, following a study with i2 media research, it said Tuesday.
The NEST research unit, backed by Vanguard Group, found that different motivations drive workers to take up self-employment so "it's unlikely that a single solution can reach the whole population and be suitable for all," NEST Insight said in a news release.
When partnering with i2 media for the study, NEST Insight discovered there are three main subsegments within self-employed workers: low-income workers who sustain themselves from self-employment; workers who opt for flexible working hours because of choice rather than need; and workers who plan to remain self-employed in retirement.
NEST Insight aims to encourage different forms of retirement saving from these subgroups by using already familiar approaches found in online gaming, prize drawings and cash-back programs. The research unit said it will also turn to mobile applications that let the self-employed workers save as they spend and seek to build saving opportunities into other online platforms.
NEST Insight will work closely with the pensions industry, academics and the government to develop suitable solutions for the three different groups over the next couple of years, it said. The clinic will then test the proposals and conduct randomized controlled trials to identify how the self-employed workers access different retirement saving opportunities and financial services.
"Auto enrollment has had a hugely positive impact on pension savings rates in the U.K., but some groups are currently missing out. Of the nearly 5 million self-employed workers in the U.K., just 17% are saving for their retirement. We want to help change this," said Will Sandbrook, executive director of NEST Insight, in the news release.
Professor Jonathan Freeman, managing director at the Goldsmiths University of London-based i2 media research, added in the release: "Whilst our own and previous research has demonstrated the diversity of self-employed people, one characteristic a very high proportion tend to share is that they are not saving sufficiently for their later years and the long term."