Attended
List
Second Delegated Legislation Committee
Monday 23 March 2020
[Siobhain McDonagh in the Chair]
Draft Automatic Enrolment (Earnings Trigger and Qualifying
Earnings Band) Order 2020
4.30 pm
The Parliamentary Under-Secretary of State for Work and Pensions
()
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I beg to move,
That the Committee has considered the draft Automatic Enrolment
(Earnings Trigger and Qualifying Earnings Band) Order 2020.
It is a pleasure to serve under your chairmanship, Ms McDonagh. I
am pleased to introduce this draft statutory instrument, which
was laid before the House on 2 March.
The draft order reflects the conclusions of this year’s annual
review of the automatic enrolment earnings thresholds required by
the Pensions Act 2008. The review considered the earnings trigger
and the qualifying earnings band for the tax year 2020-21. 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. The draft order sets a new lower limit for
the qualifying earnings band and is effective from 6 April 2020.
The earnings trigger is not changed within the order; it remains
at the level set in the automatic enrolment threshold review
2014-15, so no further provision is required. Similarly, the
upper earnings limit is not changed within the order; it remains
at the level set in the automatic enrolment threshold review
2019-20, so no further provision is required. I am satisfied that
this draft order is compatible with the European convention on
human rights.
Today’s debate is about a technical element of the automatic
enrolment framework, which as a legal necessity that we need to
have in place for 6 April 2020. The decision to maintain the
earnings trigger at £10,000, and to maintain the alignment of the
qualifying earnings band with those for national insurance
contributions, maintains simplicity and consistency.
4.32 pm
(Enfield, Southgate) (Lab)
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It is a pleasure to serve under your chairmanship, Ms McDonagh.
As the Minister has explained, the draft order revises the lower
threshold of the automatic enrolment and rounded figures for the
earnings trigger qualifying earnings band for the tax year
2020-21. It revokes the equivalent order from last year and
provides that the amounts of the qualifying earnings band should
continue to be aligned with the national insurance contributions
lower and upper earnings limits for the tax year 2020-21, which
have been set at £6,240 and £50,000 respectively. The automatic
enrolment earnings figure should remain at £10,000.
Auto-enrolment was introduced following Adair Turner’s 2006
review, commissioned by the then Labour Government, to ensure
that people who were not adequately covered or who had no cover
at all were able to have better workplace pension provision than
before. Since auto-enrolment started in 2012 more than 10.2
million workers have been enrolled in the pension scheme, with
1.6 million employers having met their duties.
Auto-enrolment has been a huge success, with 77% of UK employees
now members of their workplace pension scheme—an increase from
47% in 2012. Much more still needs to be done, with an estimated
5 million workers who are self-employed or who work in the gig
economy not qualifying for auto-enrolment, and only 15% of
self-employed people contributing to a pension scheme in
2017-18—a figure that has decreased from 27% in the late 2000s.
That is a worrying trend. As the world of work changes,
auto-enrolment needs to change too, and although that is not an
issue for this debate I ask the Minister to take note in future.
That said, we are happy to support the draft order.
4.33 pm
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I commend the order to the Committee.
Question put and agreed to.
