Matt RoddaMain Page: Matt Rodda (Labour - Reading East)
Department Debates - View all Matt Rodda's debates with the Department for Work and Pensions
I beg to move,
That the draft Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2021, which was laid before this House on 20 January, be approved.
It is a great privilege to be here in the House to move the motion. This order reflects the conclusions of this year’s annual review of the automatic enrolment earnings threshold required by the Pensions Act 2008. This is the ninth annual review. The review considered the earnings trigger and the qualifying earnings band for the tax year 2021-22. The earnings trigger determines the point when a qualifying worker becomes eligible to be automatically enrolled into a qualifying workplace pension. The qualifying earnings band determines the earnings upon which workers and employers pay contributions into a workplace pension. This order sets a new upper limit for the qualifying earnings band and is effective from 6 April 2021. The lower earnings limit is not changed. Similarly, the earnings trigger is not changed.
The Government’s commitment to automatic enrolment was demonstrated through the support for the statutory minimum employer pension contributions originally included in the coronavirus job retention scheme. I thank everyone who continues to support automatic enrolment, whether that is the participating employers or, more particularly, the 10 million-plus employees who are saving 8% per annum. I can confirm that we will be pursuing the 2017 automatic enrolment review and bringing that in in the mid-2020s. The 2019 stats show the success that is automatic enrolment, with women in workplace pension participation now at 86%—that was 40% in 2012—and young people between 22 and 29 in workplace pension participation now at 86%; that was 35%. I commend the order to the House.
The statutory instrument before the House tonight is yet another example of how the UK Government are failing our pensioners, causing some of the most vulnerable to slip between the cracks, proving that pensioners are so often an afterthought for this Conservative Government.
Despite repeated calls from the SNP, the UK Government are refusing to lower the earnings trigger for pensions automatic enrolment. The fundamental issue with this is that workers on lower wages will continue to lose out on vital retirement savings. This is yet another example of the Tories pushing through policies that see the rich get richer and the poor get poorer.
We in the SNP have continually called on the UK Government to remove the £10,000 earning threshold for pensioners’ automatic enrolment in 2021 and 2022. In the Committees for this instrument, my SNP colleagues have made clear our concerns. Indeed, my hon. Friend the Member for Aberdeen North (Kirsty Blackman) outlined that the £10,000 earnings cap is unsuitable and that the UK Government have given very little evidence as to why the £10,000 threshold was put in place. Currently, that £10,000 threshold for automatic enrolment means that workers on lower wages, either in low-paying jobs or working part time, will lose out on retirement savings.
At this juncture, I want to thank colleagues at the Association of British Insurers for their very helpful briefing note in advance of today’s debate. The ABI rightly identifies the gender and ethnicity pensions gap, which is baked into our pensions legislation. Put simply, the threshold that we are debating tonight is a kick in the teeth for women who are disproportionately low paid or in part-time work and are more likely to experience later life poverty. To put the gender divide in context, we know that the average pension pot for a woman aged 65 is one fifth of that of a 65-year-old man, and women receive £29,000 less state pension than men over a 20-year period. Indeed, this deficit is set to continue, all else being equal, only closing by 3% by 2060. Extending the coverage of automatic enrolment further by reducing the earnings threshold to a lower level, ideally the first pound, would bring hundreds of thousands of people, mostly women, into pension saving.
Consideration also needs to be given to the ethnicity pensions gap, with the latest Office for National Statistics data showing a stark contrast between the private pension wealth of white British savers and savers from ethnic minorities. Arguably, this instrument will only exacerbate that gap further, causing many women and those from black and minority ethnic groups to experience later life poverty.
In addition, when we look at the impact of this pandemic, many of the effects will be far-reaching. The jobs market has already completely changed, with more people having to take on low-paid and part-time work, and it is only right that these people are not penalised for a situation that is demonstrably outwith their control. No one could have predicted this global pandemic and the many resulting consequences that have arisen for our economy.
I am here not just to highlight the problems, because we in the SNP have offered clear solutions. The UK Government should remove the lower limit—the qualifying earnings band—so that contributions are payable from the first pound earned, lower the age threshold from 22 to 18, and expand the contribution rates beyond the 8% statutory minimum. The UK Government must begin to address the faults in pensions policy and not further exacerbate the current issues.
From WASPI—Women Against State Pension Inequality Campaign—to frozen pensions for UK citizens living abroad, the £10,000 earnings cap is another example of poor pensions policy from a Tory Government that we in Scotland did not vote for. It is vital that workers on lower wages do not continue to lose out on their retirement savings and find themselves in pensioner poverty. It is time for the UK Government to step up to the plate and support pensioners by giving them dignity in retirement.