Uber Technologies Inc.is partnering with robo advice provider Betterment Inc.to offer thousands of its drivers access to retirement accounts.
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Many Americans are having trouble saving for retirement, says Rachel Holt, Uber’s regional general manager in North America.
The offer will initially be available to drivers in Seattle, Boston, Chicago and New Jersey, and the ride hailing service plans on rolling out the app nationwide as part their “Driver Rewards” program.
While fighting a pitched court battle to prevent drivers from being classified as employees, Uber has simultaneously joined forces with Betterment LLC, a robo-adviser valued at $700 million, to offer them IRAs.
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. This announcement is coming on the heels of two huge headlines in Uber-land: the imminent rollout of the ride-hail startup’s first self-driving auto, and a federal judge’s rejection of a proposed $100 million settlement with drivers in California in a worker misclassification lawsuit.
Uber drivers who are looking to start or expand their retirement accounts, there’s good news for you!
However, it needs to be pointed out that although it might be touted as a retirement fund it is quite different fro a traditional retirement since Uber will not contribute towards it at all and it is doubtful whether this move would be able to appease the drivers, who often claim that they get a raw deal. Apparently, Uber is also working to address these concerns with additional perks like exclusive auto fix and cell phone service discounts.
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“It no longer makes sense to continue to rely on a 20th century model for worker protections and benefits”, Senator Warner said in a statement Wednesday. Users pay 0.15% to 0.35% depending upon how much money they invest. Now, Uber drivers can readily use Betterment to invest money for retirement. Traditionally, financial advisors would charge about 1 percent per year. Currently, Uber has more than 300,000 drivers on its payroll while Betterment has over 175,000 customers and is managing more than $5 billion assets, according to the New York-based startup. There are no set hours.
