Oral Answers to Questions

Gregg McClymont Excerpts

Monday 23rd June 2014 Commons Chamber

[Steve Webb]

We are keen to avoid discrediting automatic enrolment with trivially small amounts of money. My hon. Friend can imagine the newspaper headlines if we had required a firm to set up a pension scheme so that the employee and employer combined put 8p a week into a pension. We would have been laughed out of court. We have reformed auto-enrolment, and it is going extremely well. It has a good, strong reputation, and I want to protect it.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

What the Minister does not tell the House, of course, is that Library figures show that someone earning just below the raised threshold for auto-enrolment could save up to £20,000 over a working lifetime—quite a decent nest egg, I am sure that we would all agree. So why have the Government deliberately removed 1.5 million people—the majority of whom are low-paid women—from auto-enrolment? Although that sum is not enough to buy a Lamborghini, does the Minister agree that millions of people are losing out?

[Steve Webb]

On the contrary, the Pensions Commission—the hon. Gentleman often refers to the Pensions Commission, one of whose members is now a Labour peer—recommended that low earners needed an 80% replacement rate. Someone on the wage that he just gave gets an 80% replacement rate based on the state pension alone, so we are delivering—[Interruption.] That is after tax and national insurance. [Interruption.] They are paying national insurance at £10,000 a year, so they get about an 80% replacement rate without needing to be automatically enrolled. Setting up auto-enrolment for tiny amounts of saving is simply inappropriate.