Ride sharing company Uber has just announced a new partnership with investment app Betterment; a move that will allow some of Uber’s drivers to sign up for free retirement accounts.
According to Uber’s North American regional general manager, Rachel Holt, “Many Americans are having trouble saving for retirement. We’ve talked to a lot of drivers. It’s something they’ve mentioned.”
And its true; one of the major criticisms of work in the “gig economy” is that companies like Uber do not offer the traditional fringe benefits of yesteryear: health care, retirement savings, unemployment insurance, etc. So this may be one strategy for addressing that. They also remind that Uber drivers have the freedom to work whenever they want, and as often as they want.
Indeed, Democratic Senator Elizabeth Warren argues, “The ridesharing story illustrates the promise of these new businesses — and the dangers,” as she believes that all workers—no matter the job—should have such basic benefits.
With that, Uber drivers in four US cities—Boston, Chicago, New Jersey, and Seattle—will have the option to sign up for an IRA with Betterment, with all fees waived for the first year.
But that is not all. Apparently, Uber is also working to address these concerns with additional perks like exclusive auto repair and cell phone service discounts. This new IRA option, then, will just be another way the company is trying to stay ahead of the game.
Holt goes on to say, “A big part of my job is finding ways to make the experience more rewarding and stress free for the hundreds of thousands of people who work for Uber,” and Senator Mark Warner (VA-D) finds this encouraging.
Warner says, “It no longer makes sense to continue to rely on a 20th century model for worker protections and benefits.”
Of course, this is a pilot program, for now, but Uber says it plans to continue rolling it out to drivers across the country.
While there are no fees, users will pay between 0.15 and 0.35 percent, depending on how much money they choose to invest. Traditionally, financial advisors would charge about 1 percent per year. Also, Uber says it will not match driver contributions, which is often the strategy behind corporate 401(k) plans, stating that this is a means to encourage drivers to save more.