Uber tests program to help drivers save for retirement

Your next Uber could be a self-driving car
Your next Uber could be a self-driving car

Uber has a new message for its drivers: We want you to save for retirement.

Uber is partnering with investment app Betterment to allow some of its drivers to sign up for free retirement accounts.

"Many Americans are having trouble saving for retirement," says Rachel Holt, Uber's regional general manager in North America. "We've talked to a lot of drivers. It's something they've mentioned."

Starting Wednesday, Uber drivers in four places -- Seattle, Chicago, Boston and New Jersey -- will be able to sign up for a Betterment IRA (individual retirement account). All fees will be waived for the first year.

Related: The 10 best investing apps (and sites)

One of the big criticisms of "gig economy" jobs like Uber drivers is that they don't come with benefits such as health care, unemployment insurance and retirement savings.

"The ridesharing story illustrates the promise of these new businesses -- and the dangers," warned Democratic Senator Elizabeth Warren in May. She believes workers in any job, including Uber drivers, should have basic benefits.

Uber is trying to address those concerns by giving drivers unique perks such as exclusive discounts on auto repairs and cell phone bills. Now some will also be able to get a free Betterment IRA account right from the Uber app.

"A big part of my job is finding ways to make the experience more rewarding and stress free for the hundreds of thousands of people who work for Uber," says Holt.

Democratic Senator Mark Warner from Virginia is "encouraged" by this latest move by Uber.

"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.

Related: Is Uber's push for self-driving cars a job killer?

It's a pilot program for now, but Uber plans to roll it out across the country if drivers want it. CNNMoney named Betterment one of the best investing apps of 2016. It offers people a stress-free way to invest. The app asks a few simple questions and then invests users' money for them in a diversified portfolio.

Betterment's fees are some of the cheapest in the financial world because it uses only low-cost index funds (something Warren Buffett recommends for most Americans). Users pay 0.15% to 0.35% depending upon how much money they invest. Traditional financial advisers charge about 1% a year.

Uber will not be matching contributions that drivers make to their retirement accounts. In corporate 401(k) plans, companies typically match every dollar that an employee puts into his or her retirement fund -- up to a certain amount. It's a way to encourage workers to save more.

Companies like Uber argue that they also provide workers a great benefit that traditional companies don't: flexibility. Uber drivers work when they want. There are no set hours.

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