Ventures WorkerTech newsletter: July 2022 The latest update from Resolution Ventures 1 August 2022 by Emma Selinger Emma Selinger You’ve probably noticed that workplace benefits have recently gone from the ordinary (additional holiday, volunteering days, cycle to work scheme) to the extraordinary (pawternity leave, unlimited holiday, international football tournaments). But often forgotten among these perks are pensions. While unglamorous in comparison to some benefits, pension savings can make a seriously significant difference to living standards in later life. Yesterday the Resolution Foundation published Living Pension in partnership with the Living Wage Foundation analysing how much workers need to save to retire on a ‘Living Pension’, and what this means for workers earning different wages or at different stages in their careers. This month’s newsletter draws on the report exploring the issue of pensions, how they affect low-paid and precarious workers, and how tech and data can support these workers to save more for their retirement. Want to know more, or have an idea for how to support low-paid workers to save for retirement? Please get in touch. Emma Ventures Manager Resolution Ventures How can WorkerTech provide low-paid workers with a Living Pension? A Living Pension is the savings rate a worker needs to afford an acceptable standard of living in their retirement, but this week’s report from Resolution Foundation and Living Wage Foundation found that low-paid workers aren’t saving enough to reach a Living Pension by the time they retire. While the introduction of auto-enrolment did improve savings rates among low-paid workers, there is still a huge gap in savings between these workers and their higher earning counterparts. For example: Meeting the Living Pension benchmark requires workers to contribute more than the auto-enrolment minimum. Workers will have to sacrifice wages to make pension contributions, presenting difficult choices as the cost of living squeezes pay packets. Lower paid workers are especially unlikely to be making pension contributions which meet the living pension benchmarks. With the cost-of-living crisis hitting this group the hardest, there is even less opportunity to save for the future. Sector and occupation influences how much a worker will be saving, and whether it’s enough to meet the Living Pension benchmark. Low-paid workers in the public sector, where pension savings rates are higher, are more likely to be saving enough, meaning that those in the private sector, or in precarious work, are less likely to be saving for a Living Pension. While this research takes a broad view of pensions and low-paid workers, we shouldn’t forget about the impact of precarious work, self-employment, parental leave, ethnicity and gender pay gaps on savings for retirement. There is still much scope for policymakers and employers to do more to increase pension savings, especially for low earners. With the growth of fintech and open banking solutions, technological innovation also has a role to play here. Fintech is already making a difference for low-income workers through income smoothing, alternative credit score models and flexible insurance products, and we’re starting to see similar products for pensions. Here are a few organisations using technology and innovation to disrupt the world of pensions and savings for the better: 💰 Talia – a pensions saving platform designed specifically for women’s lifepaths. Talia takes into account maternity leave, caring and longer life expectancies to calculate what users need to put aside for retirement. 🎓 Financielle – a digital community providing financial education to women so that they can save more regardless of their pay or profession. 💼 Smart – an employer pension platform that administers pensions, and provides digital tracking and support to employees so that they can see what they’re saving in real time. 💸 Plum – an integration with your bank account that automates savings in a flexible and affordable way. Particularly useful for workers with volatile incomes that can’t save large amounts regularly. Do you know of other tech that helps low-paid workers save for the future? Email me with suggestions. Latest insights from the Resolution Foundation Stagnation nation – this report brings together the first phase of The Economy 2030 Inquiry’s research, focused on the state of the UK economy and the changes facing it. The current economy is failing to draw on the UK’s strengths, and this report sets out where we need to make change to create a more prosperous and equitable Britain. The Living Standards Audit 2022 – what has happened to household incomes in Britain over the recent decades? This report finds that high income inequality and low growth has led to some groups being particularly vulnerable to the cost-of-living crisis. Stronger income growth is needed to improve living standards and resilience against future economic shocks. Power plays – an analysis of structural shifts of worker and employer power. Power has shifted from workers to employers, and as union membership has declined since the 1980s, employers have gained greater wage-setting power. This risks wages being driven down by employers, and rising pay inequality between lower and higher earners. WorkerTech stories Wired reported on the potential of worker-owned platforms in the face of poor pay and conditions from privately owned companies. Around 550 projects working towards being fully-fledged worker owned platforms exist in 43 countries, with examples including Drivers Cooperative, Fairbnb and Up & Go. Our portfolio company, CareerEar, won two awards this month! Firstly the DWP recognition award Small and Medium Enterprise Recognition Award for London and Essex for their work on the Kickstarter scheme, and secondly a pitch night cash award from Centre for Entrepeneurs. CareerEar is an online platform empowering 16- to 35- year-old career-seekers who are typically overlooked to access career opportunities. Earlier this month our WorkerTech partners, Joseph Rowntree Foundation, hosted New Frontiers, a two day conference on the future of philanthropy and investment. The team has published reflections on the event highlighting the scale of change needed in the world of social investment, the need to redesign both our financial and power frameworks, and the importance of inclusion and purpose. Get involved Apply for direct investment from Resolution Ventures. We accept applications from WorkerTech ventures on a rolling basis. Or you can book a slot in our office hours for an initial conversation. Unltd, Big Issue Invest and Shift launched the Growth Impact Fund, offering social investment designed for and by founders from underrepresented backgrounds. The £25 million fund aims to ensure social entrepreneurs, no matter their background, can access the investment and support they need to grow. Find out more about the fund and how to apply on their website. Big Society Capital are hosting Addressing Imbalance Live on Tuesday 13th September, an interactive day of learning, discussion, networking and idea-sharing created for and by diverse leaders of charities, social enterprises, social investors and community groups. Are you a female founder looking for support and advice with fundraising? PwC are holding Female Founder Office Hours on 13th September for UK based female founders with at least a minimum viable product.