Uber, a San Francisco-based ride-hailing company has recently announced that it will offer retirement benefits saving options to its employees. The drivers can create a benefits account via the app only. The company also mentioned that as the employees are considered as independent contractors, it is unable to pay them a 401(k) like plan. The company also clarified that it won’t be matching the employee contribution to the retirement savings account.
Uber’s Initiative for Retirement Benefits Savings
The popular company has launched this initiative in conjunction with an automated investor service known as Betterment. Currently Uber is running a pilot program as per which the drivers belonging to specified markets are allowed to start retirement accounts by using the ride-hailing app. They can begin an IRA or Roth IRA account with the help of a robo-advisor. They are not required to keep a minimum account balance.
A major benefit of this initiative is that the drivers won’t have to pay any money to use this service for the first year. After that, they are expected to pay 0.25 percent of the average account balance for any given year.
The Benefit
Uber Technologies Inc. made a statement regarding this new initiative. It said that this new initiative would benefit tens of thousands of drivers, particularly those who are in Seattle, New Jersey, Boston, and Chicago. The drivers of New York would soon be able to try this new option too as Uber is working with New York-based Betterment to roll out the initiative there. The company also plans to roll out the program nationwide but it has not shared when the roll-out would be complete.
Non-Monetary Deal
Arielle Sobel who was representing Betterment recently shared that her company and Uber would contribute non-monetary resources to this new initiative and that while forming this unusual partnership, no money was exchanged.
Uber’s Stand
Uber shared that it doesn’t offer a 401(k) program to the drivers as they are not considered an employee. They are independent contractors so they cannot expect any benefits like retirement saving assistance or some paid time off. The company also made it very clear that it will not be making any contributions to the retirement benefits accounts set up by the drivers. It has just launched this program to ensure that the drivers take control of their own financial future.
