A group of MPs investigating the nation’s financial resilience is urging the government to address pension saving among the self-employed and do more to support single parents into the workplace. MPs are also keen for sidecar savings products to be developed further. 

  

In its first report, ‘Saving, spending, surviving: a holistic view of people’s financial resilience during the pandemic’, the All-Party Parliamentary Group on Financial Resilience is warning that the self-employed are falling through the cracks when it comes to pension savings. The report draws on evidence from charities, academics, consumers and the financial services sector on the state of personal finances.   

 

 

The APPG heard in its evidence sessions that just 22.3% of self-employed people have adequate pensions, and 32% do not save for their retirement at all. The group, co-chaired by Labour MP Tonia Antoniazzi and Shaun Bailey MP from the Conservatives, is now recommending that the self-employed should be brought into pensions through the tax system, so they can save through an equivalent system to automatic enrolment for employees. 

 

Flexible savings products are needed, the APPG also said, recommending that the government works with the financial services industry to develop ways for people to build rainy day savings. It said this could build on master trust Nest’s Sidecar Savings project. 

 

 

Separately, the APPG is calling on the government to do more to ensure single parent families are financially stable, pointing out that nearly half of all children in lone-parent families are living in relative poverty. 

 

MPs want to see a review of the 15 and 30-hour marks of free childcare support and say that if this included more hours, it would significantly help single parents to be part of the workforce. 

 

Access to flexible work arrangements were also cited as a key factor to building financial resilience across society. The APPG, building on work by the APPG for Women and Work on fair recruitment, is therefore asking the government to produce a guide for employers on how to support flexible working and launch a consultation on mandating that all job advertisements clearly state whether flexible working options are available.    

  

Antoniazzi said the APPG’s report was a long-overdue account of how fragile personal finances can quickly turn into a disintegration in living standards, mental wellbeing and future prospects.  

 

“When we planned the inquiry last summer, we did not anticipate that a cost-of-living crisis so deep would emerge as we concluded our sessions,” she said, adding: “However, the pandemic can serve as a test case for what can be done to help those across society cope with extreme financial pressures, both in terms of income and expenditure. For that reason, the recommendations we make here are even more pertinent to policymaking as those pressures continue to build.”  

  

In the past, there has been a focus on how to lift people out of difficult financial situations, but little has been done to understand why people end up there, said Bailey.  

 

“What this report does is, [it] uncovers just how close large groups of the population are to experiencing a crisis in their personal finances. It is particularly important in revealing that those who we may commonly define as ‘comfortable’ or ‘middle-class’ can be one negative life event away from struggling to meet essential costs,” he said.  

 

 

Asking people to save for retirement when they are already cash strapped was a difficult message to get across, the report acknowledged. However, “given the foresight needed to address pensions issues, it is one we should not lose sight of”, it stressed, warning of the growing likelihood that people will start to reduce pension saving to meet their living costs. "This is very likely to leave them poorer in old age. Indeed, our inquiry heard that the financial shock that many people have felt in the pandemic will be nothing compared to the shock they will feel upon retirement,” the report added. 

 

MPs also lambasted the government’s private pensions policy as “damagingly gender blind, assuming that if the same rules apply to everyone, the system is equally fair for women and men”. 

 

The APPG was set up during the Covid-19 pandemic. Its members include Fleur Anderson MP, Alex Davies-Jones MP, Florence Eshalomi MP, David Linden MP, Charlotte Nichols MP and Baroness Jeannie Drake.