The planned reform of the state pension triple lock has strengthened the case for a “second wave” of pension reforms, including extending automatic enrolment (AE) to the self-employed, according to Harmonic Financial Planning.

In its Faces of Retirement report, the firm warned that millions of self-employed people remain outside the workplace pension system, with just 17 per cent saving into a pension and only 4 per cent of those earning solely through self-employment doing so.

The report was published ahead of Prime Minister, Andy Burnham’s, announcement that the existing triple lock will remain in place until April 2030, after which the state pension will increase each year by at least inflation or 2.5 per cent, with an additional mechanism designed to maintain its value relative to earnings over time.

The government has estimated the adjusted triple lock could reduce state pension spending by £15bn a year by the end of the 2030s, rising to £50bn a year by 2050, with savings intended to help fund a new National Care Service.

Responding to the announcement, Harmonic Financial Planning founder and CEO, John Ditchfield, said reform should extend beyond the state pension to address gaps in workplace and private pension saving.

“The triple lock is a policy that unfortunately has become totally unaffordable,” he said.

“More widely there’s a general feeling among businesses, entrepreneurs, and the self-employed in the UK that they currently get a raw deal from the pension system as a whole.

“So it’s not just about ending the triple lock, but about wider reform that should include a second wave of workplace pension reforms.”

The Harmonic report argued that AE had been a major success in improving pension participation, bringing around 11 million additional savers into workplace pensions since 2012, with around nine in 10 eligible employees now saving.

However, it warned that participation did not necessarily translate into adequacy, highlighting Pensions Commission estimates that around 15 million working-age people are under-saving for retirement.

The report also pointed to the reliance on minimum AE contributions, with around a third of eligible private-sector employees contributing only at the statutory minimum, rising to around half among the lowest-paid.

Ditchfield argued that the self-employed faced an even greater challenge because AE was designed around employer payrolls and therefore did not provide the same default saving mechanism.

“So any Budget that ends the triple lock must also look at reform that helps protect their future, for example through extending auto-enrolment to the self-employed.”

Harmonic’s report called for a working committee to consider a second wave of workplace pension reform, including changes aimed specifically at self-employed workers.

It suggested that reform could be aligned with 'Making Tax Digital' to create quarterly prompts encouraging self-employed workers to make regular pension contributions.

The report also highlighted shortcomings among smaller employers, arguing that some workplace pension schemes had remained largely unchanged since being established to meet AE duties, potentially leaving members paying higher charges or investing through default funds that no longer met employer or employee needs.

Ditchfield also argued that greater support and engagement were needed to help savers understand their pension choices.

“Through my career I've been frankly horrified at how wasteful the existing system is with people paying into poor quality schemes,” he stressed.

“The UK has an excellent pension and savings industry so it should do more with the existing system by improving people's understanding of their own choices.”

Meanwhile, the report identified a wider advice gap, noting that around 9 per cent of UK consumers, equivalent to roughly 4.6 million people, currently receive regulated financial advice.

Ditchfield suggested The Pensions Regulator could play a greater role in improving outcomes, but warned that the regulator was already being asked to oversee a large workplace pension market with limited resources.

He argued that, alongside state pension reform, policymakers should consider how the wider pension system can better support groups currently outside the reach of AE.

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