Pensions (Extension of
Automatic Enrolment)
I beg to move,
That leave be given to bring in a Bill to extend pensions
automatic enrolment to all jobholders aged at least 18; to remove
the lower qualifying earnings threshold for automatic enrolment;
and for connected purposes.
As the Prime Minister said today at Prime Minister’s questions,
what we have seen over the past few years—worked on since our
time in opposition and introduced under the coalition
Government—is a huge increase in pensions take-up among the
British population. Now, 10 million more people are saving for
their pensions than did before: an increase from 46.5% of the
population saving in 2012 to 77.6% in 2020. By any stretch, that
is a massive increase and a huge boon to people in our country
who are saving for the long term.
Bringing forward the Bill is all about ambition—not mine, but the
ambition of people to look after themselves, their families and
their communities. I know many red wall MPs such as myself and my
hon. Friend the Member for Sedgefield () think about that. People are
ambitious not just for themselves, but for the towns and villages
they live in. In my patch, from Consett to Crook, Burnhope to
Langley Park, they are ambitious for themselves, for their towns
and villages and for those who live in them, their friends and
neighbours. Many of those people are excluded from auto-enrolment
purely because they do not earn enough money to be enrolled.
The other reason I mention ambition is that this measure is the
Government’s stated aim. They have an ambition to start to extend
auto-enrolment by the mid-2020s, but, as everybody who has ever
seen some of those great comedy programmes will know, and I
remember Malcolm Tucker saying it:
“‘Should’ does not mean ‘yes’.”
I really want the Government to say yes to this proposal. People
need to know that it is going to happen. Business needs to be
able to plan for it. Our country needs to feel long-term
levelling up in action, and one of the best ways we can do that
is to give people certainty that this is coming down the track
and that their pensions will be there for them, providing for
them.
I am grateful to Onward for its help in the past few months,
working with me on the report it has published today on some of
the specifics that the Bill will provide. The key is the extra
£2.77 trillion that would be invested in our pensions for the
lower-paid and younger workers who the Bill seeks to address.
That money would be saved by people in part-time work or aged 18
to 22 who do not qualify for auto-enrolment.
I will give the House a couple of statistics to highlight why
that is so important. At the moment, three quarters of those aged
22-plus are auto-enrolled into pension schemes, but under the age
of 22 it is only 20%—and that is 20% of people in work, not
students. That is a big difference, and the difference that
auto-enrolment has made since 2012. For part-time workers, while
some will earn more than the £10,000 threshold, auto-enrolment is
57.8% compared with almost 90% of workers in full-time jobs. If
we assume a similar take-up, the Bill could see an extra 30% of
the part-time workforce auto-enrolled: millions of people, mostly
women, and much more likely to be from ethnic minority
communities, to be socially disadvantaged or to have other
burdens on their time, maybe as carers. Those are the people the
Bill seeks to address and make a difference for.
Where are those part-time workers? The analysis Onward has done
shows exactly where they are. They are in places such as
Workington in Cumbria, or Hyndburn in Lancashire, or Mansfield in
Nottinghamshire, as well as large parts of the south-west, the
midlands and the north-east and north of England. They are in
areas of the country that seek that levelling up and
transformational change more broadly.
I want to give a few short examples of the people that we are
looking to help. A full-time worker on the national living wage
would gain almost an extra £100,000 into their lifetime’s
pension—a 60% increase on today. As for younger people, if the
average person working full time on the living wage between 18
and 22 paid in just a few hundred pounds a year—literally a few
pounds a week—in between those years, they would see another
£25,000 in their pension on retirement. They would pay about
£1,000 or £1,500 in and have £25,000 coming out, because compound
interest would build up over 45 to 50 years. That will make a
transformational difference to people’s lives in retirement.
This is the one that really gets me: workers with two part-time
jobs. At the moment, people earning £9,000 for two jobs, maybe
working 12, 16 or 18 hours a week in my constituency, do not get
the real benefits of auto-enrolment at all. A woman doing two
different jobs, juggling them around childcare, would see her
pension savings triple under this proposal, from under £100,000
to £300,000. Think of the transformation to that woman, aged 65.
With £300,000 she might be able to give a deposit to her kids and
also have a much more comfortable retirement than she would with
the savings that she has at the moment. The change that has been
made so far by the Government through auto-enrolment and its
expansion has been fantastic, but now we need to go that step
further to help people who are the backbone of our country.
The big differences are also particularly stark because at the
moment that woman earning £18,000 a year working two jobs does
not get the benefit, but someone earning £180,000 does. She does
not get that tax benefit, but that other person does. How can it
be right that we give tax benefits to Members of this House or
well-paid people across the country but not to people working
part time? It just does not seem fair to me.
Before I wind up, I would thank the Under-Secretary of State for
Work and Pensions, my hon. Friend the Member for Hexham (), who is ill today so cannot be here, and the
Under-Secretary of State for Work and Pensions, my hon. Friend
the Member for Mid Sussex (), who is here in his place. We
have talked about this, and I know that the Department have the
ambition and are now looking at the idea. I also thank the
Secretary of State and her team, with whom I have also talked
about it.
I thank James Blagden and Will Tanner at Onward for the huge
amount of work that they have put into the report over the past
few months; it has been really welcome in bringing out some of
those key numbers and statistics. I would also like to thank
Aviva who, with some of their actuaries, helped behind the scenes
as well. That has been very welcome, because drilling down into
some of the pension numbers and how they impact people over
decades is sometimes very challenging.
If we want to level up for the long term, this is a serious piece
of legislation that could make serious change. I sat recently in
proceedings on a private Member’s Bill and the Pensions Minister
stood at the Dispatch Box, and the hon. Member proposing some
changes said that introducing those changes was initially thought
of in 1978, and then in the late 1990s—and it is only now that
they are being brought forward in a private Member’s Bill. I do
not want this long-term levelling-up measure, which would benefit
some of the lowest-paid in our society, to slip, too, because
there is always a reason not to do it. The answer is that we must
table legislation now so that business can prepare for the
future. If we are to build back better after this covid pandemic,
there is no better way, particularly to help low-paid workers,
many of whom, in constituencies like mine, will have been working
in the care sector, the retail sector or hospitality throughout
this period. They are the ones who will directly benefit from the
legislation.
This legislation would transform the lives of millions of working
people—not in great jobs but in low-paid work—who are the
backbone of our country. The Prime Minister said in the
constituency of my hon. Friend the Member for Sedgefield that
votes were lent to us at the last general election and we have to
deliver for those people. I think the Bill is one of the clearest
ways that we could do so, and I commend it to the House.
Question put and agreed to.
Ordered,
That , , , , , , , , , , and present the Bill.
accordingly presented the
Bill.
Bill read the First time; to be read a Second time on Friday 25
February, and to be printed (Bill 221).
