Automatic Pension Enrolment

Matt Rodda Excerpts

Wednesday 26th January 2022 Westminster Hall

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I thank all colleagues for taking part in today’s debate. We have had a rounded discussion of this important issue, and it has been heartening to see so much engagement from Members across the House.

As I know colleagues appreciate, pensions are a very long-term policy area. The decisions we make today have profound effects over many years. Encouraging sustainable and sensible saving now makes for much better retirement in the future. It is therefore right that we actively explore ways to help those who could benefit from further opportunities to auto-enrol in pensions. We must work with businesses to understand their needs, and to build a system that is fair and sustainable for all. We should be ambitious and responsible at the same time, particularly in the years following the covid crisis.

Auto-enrolment has proven to be one of the most positive developments in recent memory for savers, and for securing people’s long-term prosperity. It has been transformative in encouraging millions of people to save earlier in their careers. That will dramatically improve outcomes later in life, as hon. Members have mentioned.

I remind the House that it was the Labour Government in 2008 who first introduced legislation on auto-enrolment—a contribution of which my party should be very proud. However, the measures have cross-party support, and I pay tribute to colleagues from across the House who mentioned that. It is important that we work together, and that we remember the contribution made by those in the other place, who also recognised the policy’s potential and helped develop it before it came into practice. More than a decade since its inception, it is natural that we look again at auto-enrolment.

In conversations with the pensions industry, I have heard experts call for us to consider lowering the qualifying earnings threshold and the minimum age requirement. The People’s Pension, for example, endorsed those proposals. It argues that millions of new savers would be created, many of whom would be women and people from ethnic minority backgrounds. The Association of British Insurers found that employees would be able to save an additional £2.6 billion a year if the earnings trigger was scrapped.

There is justification, as well as a desire in the sector, for policy makers to look at all available options. That is especially true in the light of the Government’s commitments in 2017 to reviewing the situation, and to getting workers to save early by considering removing the lower earnings limit and reducing the age threshold for automatic enrolment to 18 by the mid-2020s, as we have heard reiterated today. The deadline is approaching fast, so I ask the Minister to clarify what stage the Government have reached in their consideration.

I also ask the Minister to set out the work his Department has done to understand the wider implications of last year’s decision to freeze the earnings trigger and only modestly increase the upper limit of the qualifying earnings band. Understanding those consequences is important for tackling inequality and helping more workers to get into the habit of saving, as has been mentioned. Studies have shown that only 37% of female workers and 28% of black and ethnic minority workers are eligible for the scheme. Finally, I reiterate the importance of this debate, and thank colleagues from across the House for taking part. I hope the Minister will respond to the points made.