Arun Muralidhar, adjunct professor of finance at Georgetown University, thinks an innovative bond pioneered by Brazil could help fix the self-employment pension problem in the EU and the UK
Self-employed individuals in Europe range from as high as 30% of the working population in Greece to the teens in Belgium, the Netherlands and the UK. Self-employment has reshaped labour markets across Europe and the UK, yet retirement systems have struggled to adapt.
While automatic enrolment (AE) has proven effective in broadening coverage for employees, millions of self-employed workers remain outside traditional employer-based pension arrangements. Irregular earnings, absence of an employer, and administrative challenges leave this group underserved and exposed to poverty in old age.
An innovative bond – SeLFIES – pioneered by Brazil in 2023, may offer a way forward.
In the UK alone, over three million self-employed individuals are not saving into a pension. AE depends on employers to channel contributions and provide matching funds. The self-employed lack this institutional anchor. Their incomes fluctuate, making regular contributions difficult. For regulators, enforcing enrolment among highly heterogeneous, independent earners is a complex and likely infeasible task.
SeLFIES – Standard of Living, Forward-starting, Income-only Securities – were first proposed in 2017 in this magazine, and first issued by Brazil. These government-issued instruments are low-cost, low-risk, liquid, and easily accessible on today’s ubiquitous devices – mobile phones.
The structure is simple: SeLFIES pay nothing until retirement age, say 65, but from then on deliver a fixed real income (for example £10 or €10 per unit) annually for 20 years. Basically, they deliver 240 real paychecks in retirement. Because they are inflation-indexed and inheritable, they preserve purchasing power and offer flexibility across different family situations.
For the self-employed, the appeal lies in flexibility and clarity. Units can be bought in small increments – as little as £1 or €1 – through a web portal or app, ensuring financial inclusion. An individual seeking €20,000 in retirement income would need to buy 2,000 units, adjusting purchases as cash flow allows. The app tracks progress towards one’s retirement goal, shows market prices, and helps savers visualise income goals rather than abstract wealth targets.
The app requires individuals to answer just two basic questions, which are well within the grasp of even the most financially unsophisticated individuals: (a) target date of retirement; and (b) target retirement income in today’s currency (as SeLFIES adjust for changes in standard of living and inflation). The bond, by incorporating accumulation, decumulation, compounding and inflation in a single instrument, greatly simplifies retirement planning.
“Introducing SeLFIES to the EU and UK could create a rare triple win”
Arun Muralidhar, adjunct professor of finance at Georgetown University
Brazil’s 2023 launch of SeLFIES (called “RendA+” or “Retirement Income Extra”) demonstrates the feasibility of the concept and was meant to voluntarily supplement social security payments. Over 354,100 individuals (including 190,000 who had never purchased a government security) purchased these bonds within two years, raising R$7.7bn (€1.2bn) for the government.
Prices are updated three times a day, liquidity is ensured, and innovations such as gift card purchases have enhanced accessibility. A parallel education financing bond, Educa+, attracted over 174,400 investors, highlighting how such securities can deepen capital markets while addressing household financial needs.
Introducing SeLFIES to the EU and UK could create a rare triple win. For the self-employed, it offers a transparent, low-risk, and flexible means of securing retirement income, with minimal overhead and effort. For governments, SeLFIES issuance is equivalent to standard debt issuance but channels savings directly into long-term infrastructure.
Many debt management organisations are struggling to issue long-term debt because of the decline in demand from defined benefit pensions; SeLFIES provide an alternative way for them to address this challenge. And if well designed (e.g., indexing the bond to a VAT index), they are hedged too. For the financial industry, the bonds create a new class of securities that could serve as benchmarks, improve annuity pricing transparency, and foster market innovation. In the EU, there is an additional benefit because SeLFIES can serve as pan-European pension plans, because a citizen in the Netherlands can easily purchase SeLFIES issued by Italy or Portugal.
Self-employment is growing, but without reform, millions risk inadequate retirement income in the EU and UK. Existing pension frameworks, designed around stable employment relationships, are ill-suited to this group. SeLFIES offer a practical solution: simple, transparent, and adaptable to the realities of self-employed life.
For policymakers, the challenge is not whether to act but how quickly. Ignoring the issue risks entrenching inequality. Adopting SeLFIES (on mobile phones) could transform retirement security for millions of workers on the margins of the system.
Arun Muralidhar is adjunct professor of finance at Georgetown University
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