The sidecar model of saving could be a potential solution for the self-employed, a Nest expert has suggested.

Speaking at the Nest Insight conference yesterday, 28 June 2018, Nest Insight executive director Will Sandbrook said that it is very interested in the model and that it could play a role in the space, but that it wouldn’t be a one size fits all solution.

Earlier this week, the Association of Independent Professionals and the Self-Employed (IPSE) urged the government to dismiss the idea of auto-enrolling self-employed workers, and instead called for the creation of a sidecar pension scheme.

Sandbrook said: “Obviously we are very interested in sidecar and liquidity and the interaction between liquidity and pensions saving, to my mind if there is an application of a sidecar product to the self-employed, it looks a bit different to the application to sidecar in the workplace.”

The sidecar pension scheme would allow them to save for later life but also put aside money into a separate fund for any emergencies.

“Essentially you ask people to save over and above the auto-enrolment minimum at the same time to a more liquid account and later, as the liquid account accumulates it becomes a pre-commitment device above a threshold to start rolling more money into the retirement account as well.

"I wonder, and this a speculation, if there is a similarly hybrid product model within the self-employed space, you would say to the self-employed, ‘start your savings habits, start putting money away, but none of it is locked up straight away, it only starts to become locked up once you reach that level’,” he added.

A similar solution is being looked at in the US and trails are underway to make the first £1000 of savings accessible before putting a lock behind.

Sandbrook said that Nest Insight is set to trail later the sidecar model in the workplace later in the year.

Despite this, he warned that it wouldn’t work for all groups, adding: “We need to step back and look at a specific group of people and their problems and ask what kind of product design is likely to work, and crucially we should test those.”

There have been a number of initiatives set up in order to find a solution to the self-employed savings crisis over recent months, and in April, Royal London director of policy Steve Webb suggested that HM Revenue and Customs could assist the self-employed with pension savings through the tax return system.

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