Asked by: Baroness Drake (Labour - Life peer)
Question to the Department for Work and Pensions:
To ask Her Majesty's Government what estimate they have made of the number of small pension savings pots held by individuals; whether that number has increased in the last five years and by how much; what assessment they have made of the problems arising from any such increase; what plans they have to address those problems; and what assessment they have made of the impact of that increase on workers in low paid high turnover jobs.
Answered by Baroness Buscombe
So far, the Government’s automatic enrolment (AE) programme has led to more than 9.4 million employees being automatically enrolled in a workplace pension, with more than 1.1 million employers meeting their duties as of the end of February. We do not routinely collect data on the number or size of individuals’ pension pots, but it is clear that many of these pots will be small at this early stage. However, the proposals announced in the 2017 Review of Automatic Enrolment will mean pension saving starting from a younger age, which we know makes a real difference. A National Minimum Wage earner who starts saving from 22 could build a pot of £82,000 (in today’s earnings terms) by state pension age. Had they started saving at 18, that pot could be £92,000 (12 per cent larger). We will keep the issue of small pots under review now that the roll-out of AE is almost complete.
As of March 2017, 94 per cent of eligible jobholders automatically enrolled in an occupational defined contribution scheme were enrolled in a Master Trust. The authorisation and supervision regime introduced by the Pension Schemes Act 2017 will ensure that members of Master Trust schemes, who will often have small pension pots, have equivalent protection to people saving in other types of pension schemes.
Dormant pots can be eroded over time by costs and charges, and the smaller the dormant pot, the greater the impact. Members have the right to know all the costs and charges they are paying. The Government consulted last year on regulations requiring charges and transaction costs to be given to defined contribution occupational pension scheme members and to be published. We laid regulations to achieve this on 26 February, and they will come into force on 6 April. The Financial Conduct Authority plan to consult on corresponding rules for workplace personal pension schemes in the second quarter of this year.
Members could also benefit from the introduction of the pensions dashboard, which should make it easier to see all their pots in one place when they choose to do so. This would enable them to feel in control and take ownership of their pensions. We are currently conducting a feasibility study looking at how we can make the pensions dashboard a reality, and will publish our findings later in the spring.
Asked by: Baroness Drake (Labour - Life peer)
Question to the Department for Work and Pensions:
To ask Her Majesty's Government what is their estimate of the number of women who are carers of children and are eligible to claim credits for state pension accrual where crediting is not automatic; how many eligible women actually claim such credits; and what plans they have to increase the level of claims.
Answered by Baroness Buscombe
The information requested is not available. Administrative data records information on whether an individual accrues a qualifying year towards State Pension but not whether that was through an automatic process or whether the person has made a specific claim. More generally, HMRC publish statistics on Child Benefit claims and take up rates which are available on the Gov.uk site: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/684064/Child_Benefit_Commentary_August_2017.pdf
National insurance credits where the individual has to make a claim are well publicised on the Gov.uk website under national Insurance credits / eligibility.
Asked by: Baroness Drake (Labour - Life peer)
Question to the Department for Work and Pensions:
To ask Her Majesty’s Government what plans they have to increase the number of mothers claiming their full entitlement to NI credits towards their state pension.
Answered by Lord Henley
Parents who are not working can safeguard their State Pension by claiming Child Benefit. National insurance credits are automatically awarded to people claiming Child Benefit for a child under age 12.
Since 2013, new parents and carers with household income above £50,000 are liable to pay a High Income Child Benefit Charge. Individuals can choose to receive Child Benefit and pay the charge or not receive Child Benefit and not pay the charge, and will receive credits under either option.
Information on what parents should do to protect their State Pension is included in the Bounty packs available to new parents and on GOV.UK.
Asked by: Baroness Drake (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty’s Government what assessment they have made of the number of families that would be affected, over the next five years, by the Child Tax Credits (Amendment) Regulations 2017 whereby a child or qualifying young person born before 6 April 2017 who is taken into a household as a result of a kinship care arrangement, will not be disregarded for the purposes of the two child limit if the claimant or joint claimants subsequently have a third child of their own born on or after 6 April 2017; and what is the anticipated saving to the public purse of such a change.
Answered by Baroness Neville-Rolfe - Minister of State (Cabinet Office)
From 6 April 2017 families will no longer be able to claim additional support of up to £2,780 per child per year for third and subsequent children born on or after this date through Child Tax Credit or Universal Credit. All households should think carefully about whether they are financially prepared to support a new child without relying on means-tested benefits.
There will be no cash losers as a result of the Government’s policy to limit support to two children in Child Tax Credit and Universal Credit.
We recognise that some claimants are not able to make the same choices as others about the number of children in their family. We have been clear that for third and subsequent children there will be exceptions for certain groups.
The forecast savings from the policy to limit support to two children in Child Tax Credit and Universal Credit were updated at the Spring Budget 2017. The cost to the public purse of the exceptions were also outlined in the Spring Budget 2017.
Asked by: Baroness Drake (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty’s Government what discussions they have had with HM Revenue and Customs about the annual publication, in standard format, of data on the drawing of pension savings that have to be reported as taxable income by (1) age, (2) gender, (3) characteristics of income draw down products, (4) cash lump sums, and (5) annuities.
Answered by Lord O'Neill of Gatley
HM Revenue and Customs (HMRC) publishes the number and value of flexible payments made from pensions since April 2015. The quarterly publication does not include breakdowns of pension payments by characteristic, nor are there any plans to.
In accordance with the National Statistics Code of Practice, Official Statistics are shared with a minimal number of named officials 24 hours prior to publication. HMRC maintains and publishes a record, which can be found on gov.uk, of all of those who have pre-release access to National Statistics and Official Statistics.
Asked by: Baroness Drake (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty’s Government what steps they are taking to increase private pension saving by the self-employed.
Answered by Lord O'Neill of Gatley
The 2005 Turner Commission recommended that the self-employed should be able to join a pension in an easy and cost-effective fashion. Therefore the Government-backed pension provider, the National Employment Savings Trust (NEST) offers low-charge pension schemes to the self-employed, as well as to all employers.
Automatic enrolment has been a huge success to date with almost 6 million eligible workers people now enrolled. We will be reviewing automatic enrolment in 2017. We are keen to identify issues that should be addressed within the review and will be working with stakeholders to determine its scope.
The Government also recognises that the self-employed might benefit from saving in different ways to employees. In 2011 the Government introduced carry forward of annual allowances, which allow individuals with irregular earnings to use any unused Annual Allowance from the previous three years to contribute more to their pension in particular years, if this suits them better than making more regular pension contributions.
Asked by: Baroness Drake (Labour - Life peer)
Question to the Department for Work and Pensions:
To ask Her Majesty’s Government what steps they are taking to ensure value for money is achieved for the pension savings of ex-employees in cases where the employer transfers their pension pots to a pension arrangement exempt from the charge cap regulations.
Answered by Baroness Altmann
The Occupational Pension Schemes (Charges and Governance) Regulations 2015 set out the tests that an arrangement in an occupational pension scheme to which the charge cap applies must meet in order to be designated as a default.
Where an employer or trustee switches some or all members’ contributions to a new default arrangement, any funds left in the old default arrangement will continue to be subject to the cap. Where an employer transfers all their employees’ pension pots to a new scheme, contributing members will be protected by the charge cap when the new arrangement meets the test for a default as set out in the Regulations. Where this is the case, ex-employees moved into the same arrangement will also be protected where they have made a contribution after the Regulations came into force.
Furthermore, the ban on Active Member Discounts will prevent providers from increasing charges for non-contributing members beyond those imposed on a member for whom such contributions are still being made.
I would be happy to receive any evidence from the Noble Baroness about ex-employees being transferred to an exempt arrangement in occupational schemes.
Asked by: Baroness Drake (Labour - Life peer)
Question to the Department for Work and Pensions:
To ask Her Majesty’s Government what plans they have to assist workers who change their jobs, or leave the labour force, to consolidate and aggregate small pension pots.
Answered by Baroness Altmann
I refer the Noble Baroness to the Written Statement I made on 15 October, HLWS238, which explains why the time is not right to implement a system to consolidate or aggregate small pots.
Members still have a right to request a member-initiated transfer if they want to move their pots when they change jobs or leave the labour market. To introduce a system of automatic transfers would be a significant new process for both schemes and members to get to grips with at a time when the pensions market is changing fast.
The introduction of the new State Pension, the continued implementation of automatic enrolment and the introduction of the pensions flexibilities - allowing members more freedom and choice about how and when they access their pensions are all major reforms to pension savings. I believe that the Government, providers, employers and members need to focus on these reforms to ensure their success.
The future pensions market could look different from the current one. It is important that any system of consolidation is long-lasting and reflects that future landscape.
This does not mean that the project has ended and I am very grateful for the contributions that the industry has made to this project. I fully intend to ensure that the insight gathered in our extensive engagement with industry should be applied to the model when work is restarted.
Asked by: Baroness Drake (Labour - Life peer)
Question to the Ministry of Justice:
To ask Her Majesty's Government what plans they have to lower the level of fees for access to employment tribunals.
Answered by Lord Faulks
The Justice Secretary is committed to reviewing the impact of the introduction of fees in the employment tribunal system. The Ministry of Justice is currently finalising arrangements for the timing and scope of the review to ensure that the impacts can be properly assessed. An announcement will be made when the review begins, and again when it has been completed, setting out the results.