Oral Answers to Questions

Debate between Steve Webb and Julie Elliott

Monday 23rd June 2014 Commons Chamber

[Julie Elliott (Sunderland Central) (Lab)]

8. What estimate he has made of the number of people below the threshold for auto-enrolment in a workplace pension.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

We estimate that around 2.7 million individuals, aged 22 to pension age, who have earnings below the earnings threshold for auto-enrolment are not saving in a qualifying workplace pension in the private sector. About 1.6 million of those individuals are earning between £5,772 and £10,000 and have the right to opt in. Employers must tell workers about this right.

[Julie Elliott]

I thank the Minister for that answer, but does he agree that it would be right to extend pension auto-enrolment to all low-paid workers who are missing out at the moment?

[Steve Webb]

I am grateful to the hon. Lady, but let me explain why I disagree with her. She would enrol people at, for example, £6,000 a year—that is the policy of the Labour Front-Bench team. At current contribution levels, someone earning £6,000 a year would be putting 8.8p a week into a pension. If they did that for 35 years, they would end up with a pension of £1.93 a week. That does not seem a sensible policy to me.

Quality Workplace Pensions

Debate between Steve Webb and Julie Elliott

Thursday 27th March 2014 Commons Chamber

[Steve Webb]

I am grateful to my hon. Friend. Stakeholder pensions were the previous Government’s one attempt to limit charges. He will recall that they initially introduced a 1% cap—again, we have seen the colour of their money—before going back on that and allowing 1.5% for 10 years. I have always wanted to say that we will take no lectures from the Labour party, and he has now given me the chance. On defined ambition schemes, we will be taking that agenda forward, and I hope to have more to say about that when we publish our response to the consultation document. With regard to large-scale pension schemes, the command paper we are publishing today included a section on scale that I think he will find interesting. We think that the pot-follow-member model is the best way of ensuring that people build significant pension pots with the person they are currently saving with.

[Julie Elliott (Sunderland Central) (Lab)]

Why is the Minister waiting a year to introduce the full cap and a further year to ban people taking money from pension schemes to pay for sales commission? Why is he not acting much sooner?

[Steve Webb]

There is a perfectly straightforward answer to the hon. Lady’s question. When we asked firms to enrol their staff automatically, we asked them to plan 12 months ahead, because it takes a long time to set up a pension scheme, to choose a pension scheme and to communicate with scheme members. A firm sitting down today to plan for April 2015 knows the rules of the game today so that it can choose its scheme in an informed way. She asked why we have allowed a further year for commission and active member discounts. Clearly, if either of those takes a scheme above 0.75%, which many do, they will have to comply immediately in April 2015, but many of those are based on complicated contractual arrangements in pension schemes. We have to strike a balance between unpicking all those and focusing the pensions industry on delivering automatic enrolment, which is a key priority for the next 12 months.

Oral Answers to Questions

Debate between Steve Webb and Julie Elliott

Monday 23rd April 2012 Commons Chamber

[Steve Webb]

As the hon. Gentleman knows, when we introduce a single state pension there will be no more contracting out, so clearly those who were in contracted-out schemes will be contracted back in. However, the annually managed expenditure costs of the scheme are being met by the reduction in means-testing and paying of savings credit to new claimants only, and by an increase in de minimis provision, so that people who have spent only a few years in the country do not build up a state pension as they would currently do. Those are the two main ways of meeting the costs, but they will also be met through the non-accrual of additional second state pensions after 2016.

[Julie Elliott (Sunderland Central) (Lab)]

2. What assessment he has made of the effect of changes in funding for childcare support on unemployment among women.

State Pension Age (Women)

Debate between Steve Webb and Julie Elliott

Wednesday 11th May 2011 Westminster Hall

[Steve Webb]

The things that Turner recommended are not consistent with each other. We cannot, for example, have a consistent percentage of income during life in retirement and give 15 years’ notice at the same time, because longevity is increasing much faster than that. Something somewhere has to give.

One point that has been missing during this debate—the only time that it was mentioned was when an hon. Member quoted me from last week’s debate—is that if we delay till 2020, as the hon. Member for Leeds West (Rachel Reeves) proposed, we will have to find £10 billion. My hon. Friend the Member for Argyll and Bute (Mr Reid) raised an important point, and he is analytically correct: that does not help us in the comprehensive spending review period or help the long-term structural deficit, because the age would have been 66 anyway. However, it does do one thing: it takes £30 billion—or rather, £10 billion; the whole change amounts to £30 billion, but the difference between the two of us is £10 billion—off the national debt. As he knows, servicing the national debt is one of the most crippling things that this Government must do. That is why such difficult decisions must be made.

Our changes will take £30 billion off the national debt. I do not know what the interest rate on the national debt is, but let us say 5% for the sake of round numbers. That is just to make the numbers add up; I do not suppose for a minute that it is 5%. That is £1.5 billion extra every year to spend on services or whatever rather than on the national debt. I think that that would be the hon. Lady’s preferred solution.

[Julie Elliott]

In those calculations, has the Minister taken into account the number of women who will end up on benefits to cover the shortfall during the time when they had planned for a pension, as in the examples that I quoted?

[Steve Webb]

Yes, we have. All our costings make assumptions about the proportion of people who would find themselves on benefits. Hon. Members have asked what people will live on between 64 and 66. Clearly, there will be a range of responses. Some people will go on working longer. Seven out of 10 people in the cohort that we are discussing—those born in 1953 and 1954—are in work at the moment.

Several people raised the important issue of different socio-economic groups. Across the socio-economic scale, life expectancies are rising. We cannot use the fact that there are differences between different groups—as there have been probably for ever, and certainly for the past century—as an argument for doing nothing. That argument would apply under the proposals of the hon. Member for Leeds West. If we raised the age a year to 66 in 2020, it would have exactly the same impact on the different socio-economic groups. Her proposal would have exactly the same impact on the numbers of carers and volunteers aged 64 to 66. Many of the points made by hon. Members in this debate about the impact on that age group would apply exactly, only four years later, or six years later under her proposals. We need to make a distinction between things that will be inevitable as the state pension age rises and the consequences of doing it more rapidly, which has been the focus of this debate.

Members have asked about caring responsibilities. We might not have expected this, but it is striking that the number of women within this age cohort who say that they have caring responsibilities is falling, partly because of social and demographic change. In 1993, of the women who are now in the 55 to 59-year-old age cohort, 15% had caring responsibilities, but, in 2010, the figure halved to 7.1%. Again, that suggests significant changes and that people are living longer and working longer. I suspect that caring responsibilities are being taken on, but that that is happening later in life than it would have previously.