Uber has announced its partnering with investment app Betterment to provide its drivers with an option to sign up for free retirement accounts.
Uber's Retirement Plan
According to Bloomberg, even if Uber drivers have a freelancer status, they will get s retirement option. Drivers working through Uber Technologies Inc.'s platform, while they may not have a 401(k) plan, will soon be able to open a retirement account right in the app.
The ride-hailing company is partnering with another startup to provide the retirement option to its drivers, in traditional Silicon Valley style. Through robo-adviser Betterment,Uber drivers will be able to set up an individual retirement account (IRA) on its app.
CNN Money cites Rachel Holt, Uber's regional general manager in North America, who explained the reasons for the company's decision. According to her, many of the Uber freelance drivers have trouble saving for retirement, an issue common for many Americans.
Uber drivers in Boston, Chicago, Seattle and New Jersey will be able to sign up for a Betterment IRA starting Wednesday, August 24. For the first year all fees will be waived.
Uber Freelance Drivers Part Of "Gig Economy"
Jobs like Uber drivers are part of a new niche dubbed the "gig economy." The problem with this type of jobs is that they usually do not provide benefits such as unemployment insurance, health care and retirement savings.
Many criticisms of the "gig economy" have come from various sources, from NGOs to economists, job market analysts and politicians. For instance, Democratic Senator Elizabeth Warren warned in May about the dangers of the ridesharing emerging businesses. According to her, Uber drivers like workers in any job, should also have basic benefits coverage.
By giving drivers unique perks such as exclusive discounts on cell phone bills and auto repairs, Uber has already been trying to address those concerns. Now, the ridesharing company is taking a further step by providing a retirement option via a free Betterment IRA account right from the Uber app.
