The Taylor Review and pensions: bad news for precarious workers

Jo Grady - Senior Lecturer in Employment Relations, Sheffield University Management School

Sadly, Matthew Taylor’s recent review of Employment Practices in the Modern Economy squandered his opportunity to properly challenge or transform this policy stereotype. Despite pensions being part of Taylor’s remit, his report mentions ‘pension(s)’ only 40 times. If we eliminate references to government committees, officials, an overview of pension saving, and so on, the report only directly discusses ‘pension(s)’ with reference to potential solutions/recommendations 4 times. The result is that the Taylor Report largely focusses on employment practices and protections, with very little consideration of pension rights and practice. Taylor’s main contribution is to acknowledge that self-employed workers should somehow have auto-enrolment pensions extended to them. This would undoubtedly help some under-pensioned workers, but many precarious workers are not self-employed, with low, unpredictable incomes, and with little financial resilience or scope to save meaningfully for retirement.

This is a serious omission by Taylor and his team, as whilst the self-employed are a heterogeneous group, in 2014 just 17% of them were saving in a private pension, a drop of 40% over 16 years. In addition, there are currently about 905,000 workers on ZHCs and 800,000 agency workers many of whom make up the ranks of the under-pensioned. These workers ordinarily do not have access to occupational pension provision and are less likely to be covered by auto-enrolment because of low pay or short-term contracts. The number of people automatically enrolled in a pension has increased in recent years, from 10.7 million in 2012 to 15.1 million in 2016. However, workers earning less than £10,000 a year are not eligible for auto-enrolment, thus excluding low earners and excluding precarious workers from this particular policy solution. Likewise, the proliferation of ZHCs also means that ZHC workers with multiple jobs miss out on auto-enrolment, even if they earn enough to qualify.

The fundamental flaw of Taylor’s review is that it is predicated on a naturalised neoliberal economic assumption that risk can be offset from individuals now, to individuals in the future. Further, it promotes the belief that if individuals engage in a vertical transfer of wealth to their future selves, we can solve the problem of low paid and precarious work. This approach also promotes the belief that if we can solve the problem of insecure work now, we don’t need to worry too much about pensions. But solving one, does not solve the other, and what Taylor offers us is a superficial solution, which means the under-pensioned remain ignored.

The Taylor report also ignores the broader crisis in pension provision, and how precarity has been used in recent years by organizations to renegotiate pension settlements with their workforce, and appropriate value back. These strategies play out in a number of ways; closure of pensions schemes, devaluing of pension pots, cashing-in pensions, and occur alongside the driving down of wages, whilst companies simultaneously appropriate value that used to pay more lucrative rates of wages for employees, and higher pension contributions.  Younger and precarious workers are predominantly affected, and sadly the minor tinkering recommended by Taylor offers these under-pensioned workers little chance of improved pension prospects.