Some people would say that saving for retirement is easy. However, the process is particularly hard for people who work part time or who freelance for a simple reason: they are much less likely to have access to a retirement account through their jobs. Now Uber Technologies Inc. is partnering with robo advice provider Betterment Inc. to offer thousands of drivers the access to retirement accounts.
Betterment is an online investment and wealth management company which could provide a year of automated investment management advice for drivers in Seattle, Boston, Chicago and the state of New Jersey.
“Uber reached out to Betterment about the partnership earlier this year after hearing from drivers who wanted more help managing their money,” said spokesman Michael Amodeo. “Drivers said they wanted it to be easier to save for the long term, to take control of their finances.”
For Betterment, the partnership will put its services at the fingertips of thousands of would-be investors, giving it the potential to significantly boost the number of retirement accounts from the roughly 80,000 it manages now. Founded in 2008, Betterment recently surpassed $5 billion in assets under management.
Uber said, “drivers can use their Uber app to open a Betterment IRA (individual retirement account) or Roth IRA for free. People who drive with Uber can get started with no minimum account balance.” After the free year expires, users with a balance of less than $100,000 pay an annual fee of 0.25% of the average annual account balance for the year, or $25 on $10,000.
The action of Uber to increase drivers’ access to retirement account comes as the company faces more pressure from drivers who want to be treated as employees instead of contractors. Last week, a federal judge rejected a proposed $100 million settlement that would have ended a class-action lawsuit from about 385,000 current and former drivers in California and Massachusetts. The judge called the settlement “unfair” and was not enough to cover what the drivers estimate they are owed.