Pensions (Extension of Automatic Enrolment) (No. 2) Bill Bill, not
amended in the Public Bill Committee, considered. Third Reading
1.34pm Jonathan Gullis (Stoke-on-Trent North) (Con) The Bill before
us today provides the legislative powers to implement the 2017
automatic enrolment review recommendations to extend automatic
enrolment to young adults aged 18 to 21, by introducing powers to
lower the age criteria for enrolment and remove the lower earnings
limit,...Request free trial
Pensions (Extension of Automatic Enrolment) (No. 2) Bill
Bill, not amended in the Public Bill Committee, considered.
Third Reading
1.34pm
(Stoke-on-Trent North)
(Con)
The Bill before us today provides the legislative powers to
implement the 2017 automatic enrolment review recommendations to
extend automatic enrolment to young adults aged 18 to 21, by
introducing powers to lower the age criteria for enrolment and
remove the lower earnings limit, which would improve saving
levels among low and moderate earners. Taken together, these
changes would help improve financial resilience for retirement
among young people, women and lower earners. Extending the
eligibility age to 18 will support younger workers and provide
them with the opportunity to begin saving from the start of their
working lives for a more secure retirement.
Removing the lower earnings limit will proportionately benefit
the lowest earners the most. Research from Onward shows that
roughly 25% of people from Stoke-on-Trent North, Kidsgrove and
Talke are not yet auto-enrolled into pension schemes. The Bill
tackles that, creating more stability in the long term. For the
first time, everyone will get an employer contribution from the
very first pound of their earnings if they are enrolled or opt
in. That will help to improve the incentive to save, especially
for women and those individuals working part time or in multiple
jobs.
Automatic enrolment has been and remains a long-term project. It
has been successful through the adoption of a carefully staged,
systematic and evidence-based approach, which has been supported
by the consensus, including cross-party support, in this place.
That is the approach on which successful expansion must be based
and why the Bill works in the way that it does—to require
Ministers to consult before implementing these changes, for
example, on the best way and the optimum timetable for doing so.
That gives Parliament, employers, workers and other stakeholders
a key role in determining how best to implement the expansion of
workplace pensions.
People who earn £9,000 from two separate jobs, and who may be
working 12 to 18 hours a week, juggling their jobs around
childcare or caring responsibilities, do not currently get the
benefits of auto-enrolment at all. For part-time workers,
auto-enrolment stands at around 60%, compared with almost 90% of
workers in full-time jobs. The Bill will see roughly an extra
third of the part-time workforce auto-enrolled, which is an
increase on the percentage based in Onward’s research.
Further research from Onward suggests that, when this change
comes through, it will bring almost £3.5 billion to people in our
area for their total life savings. This will be transformative
for the lives of everyone not just across our great country but,
most importantly, across Stoke-on-Trent North, Kidsgrove and
Talke.
The Bill will help to put cash into communities, help people to
help themselves, and provide the extra private sector money to
deliver the levelling up that we so desperately need. Automatic
enrolment is widely and rightly recognised as a success. It has
transformed workplace pension saving for millions of workers and
is enabling them to save towards greater security in
retirement.
What this Bill makes certain is that, in areas such as
Stoke-on-Trent North, Kidsgrove and Talke, North West Durham and
Consett, where nearly one in four people are not yet
auto-enrolled onto a pension scheme, people will have more
financial security in the long term. It simplifies the process,
and for just a few pounds a week, through the power of compound
interest, people could be £30,000 better off in retirement. That
is absolutely transformative, which is why the Bill is so
critical.
I know that the whole House is proud to support the Bill at this
current stage and is committed to this expansion of
auto-enrolment to build a more inclusive and stronger savings
culture for future generations.
1.38pm
(Crewe and Nantwich)
(Con)
I congratulate my hon. Friend the Member for Stoke-on-Trent North
() on securing this Bill’s
passage through the House.
I wish to highlight the importance of this issue to the whole
country in the long term. The UK, like most of the rest of the
world, has an ageing population. In the next 25 years, the number
of people older than 85 will double to 2.6 million—it is often
described as the demographic time bomb. Pension saving is one way
to tackle the strain that that will place on the public finances.
As we know already, when people’s pensions savings are not
sufficient, the Government have to step in and provide that
minimum floor and safety net.
Therefore, the more that we can encourage individuals privately
to save to support themselves in retirement the less the state
will have to do through taxation. That is why businesses can and
have embraced these changes. Although they are making a
contribution in the short term to pension savings, they will see
a lower tax burden placed on them as employers in the long term
as we seek to meet any gap that might exist later on in people’s
lives when they retire. The policy has already been a fantastic
success, as my hon. Friend outlined. This change is an important
step forward, which I support.
1.39pm
(Darlington) (Con)
It is a real pleasure to see the Bill reach Third Reading. I am
very grateful to you, Mr Deputy Speaker, and to Madam Deputy
Speaker, for allowing me to speak for the fourth time today.
I pay tribute to my hon. Friend the Member for Stoke-on-Trent
North () for guiding the Bill
through its legislative journey, my hon. Friend the Member for
Grantham and Stamford () for raising this issue in
Westminster Hall last year, and my very good and hon. Friend the
Member for North West Durham (Mr Holden) for laying the
groundwork for the Bill before he was elevated to high office. It
is great to see him in his place today.
When auto-enrolment was introduced, as an employer I was fearful
of the impact it might have on my business and fearful of the
costs it would burden me with, but auto-enrolment has proved to
be hugely successful, reversing the decline in workplace pension
saving and ensuring that millions more people are now saving for
their future. I saw at first hand the benefits the scheme has had
on the lives and futures of my employees. Employees who would
never have considered being part of a pension scheme were put in
a position where it became a simple and easy process. For the
first time, they were ensuring that they did not fall into the
trap of under-saving for retirement.
We have to recognise that for those under the age of 22 the
number of people enrolled in a pension is woefully low. Among
those in part-time employment, although some will earn more than
the current £10,000 threshold, the number of those auto-enrolled
is still significantly lower than among those who are in
full-time employment. The 22-year-old minimum age simply does not
work. Why should someone who chooses to start working before they
are 22 not be paying into a pension from that age, the same way
as someone who is 22? They would have much to gain from
auto-enrolment being extended to them. Moreover, we must
recognise that the current system also disproportionately impacts
women and those on the lowest earnings in our society, who are
more likely to be in part-time work and have multiple part-time
jobs, like many of my constituents in Darlington.
In 2019, I stood on a manifesto to level up communities across
the United Kingdom, and the extension of auto-enrolment is a
policy that has the potential to have a real positive impact on
people’s futures. It would be a commitment to level up for the
long-term. The Bill is levelling up in action.
Extending auto-enrolment could potentially add trillions of
pounds to the nation’s pension pot. It is a chance to ensure that
people are saving for their future from a young age. It allows us
to ensure that the poorest in society have a more secure future
and takes steps towards closing the gap between men and women’s
pension savings.
Mr (Old Bexley and Sidcup)
(Con)
Alongside this positive Bill, which builds on the success of
auto-enrolment, which the Conservative Government adopted, does
my hon. Friend agree that it is important we also support the
Government’s initiatives to roll out pensions advice more widely,
so that people have a better understanding of their own financial
situation and pensions saving, particularly for men, women and
younger people?
My hon. Friend makes a really important point. I know only too
well, from conversations I had with family members encouraging me
to take up a pension when I was in my early 20s, it seemed an
awfully long way off. I can tell the House, some 30 years later,
that it comes around very, very quickly. The earlier we all start
saving, the better.
In conclusion, the extension of auto-enrolment would have huge
benefits for many people in Darlington and right across the
country. I am delighted to support the Bill and look forward to
it completing its legislative journey.
Mr Deputy Speaker ( )
I call the shadow Minister.
1.43pm
(Wirral South) (Lab)
It is a pleasure to speak on the Bill. I am sure the House will
be relieved to know that I do not intend to speak for long,
because the Bill has cross-party support. Improving pensions
legislation has a long history of cross-party support, beginning
with the legacy of the pensions commission, which reported 21
years ago. The Bill is a part of that ongoing legacy. Saving for
our future is very important for us all. The thing that this
House can do to help people save for their future is offer a
consistent policy approach, and that is what the Bill does. We
have made progress on auto-enrolment, but we can go further. It
is a pleasure to support the Bill.
I will ask a small number of questions, which I will be grateful
if the Minister could answer. The Opposition wholly supports this
Bill. It would be helpful to know when in the autumn the
consultation will take place. What will the Government strategy
be for communicating with young people in particular? I note
comments from Members about the power of good that it can do for
young people. There have been few positive policy areas for young
people over the past years. I would be grateful if the Minister
could talk about what the Department for Work and Pensions will
do in the area. Could she say what feedback it has had from
employers so far, and from trade unions? What is the Department’s
plan for working with both those groups and with wider civil
society and business communities, to make sure that this is a
success? What is the timetable for bringing this legislation into
force? What can we expect from this point? If the Minister could
talk us through the timetable, I would be most grateful. I wish
the Department the very best in making this legislation a
reality.
1.45pm
The Parliamentary Under-Secretary of State for Work and Pensions
()
I begin by congratulating my hon. Friend the Member for
Stoke-on-Trent North (), and my hon. Friend the
Member for North West Durham (Mr Holden) before him, on
successfully piloting this Bill through all its stages in this
House. Their efforts will improve the retirement aspirations for
millions in the UK, from young people starting work at 18 with a
pension for the first time, to those already in a workplace
pension who will now build pension savings from the first pound
of their earnings.
I acknowledge the support of Members across the House in
progressing this legislation. The shadow Minister, the hon.
Member for Wirral South (), is right that there has
been broad consensus on workplace pensions since the pensions
commission. It is a testament to the importance that we all place
on delivering improved retirement outcomes for our fellow
citizens.
A lot has been achieved in the last decade of the reforms, as has
been mentioned numerous times. More than 10 million people have
been automatically enrolled into a workplace pension. More than 2
million employers are paying into employees’ pensions for the
first time. My hon. Friends the Members for Crewe and Nantwich
(Dr Mullan) and for Darlington () are right that it has been
embraced by employers, and we should celebrate that. An
additional £33 billion in real terms was saved into workplace
pensions in 2021 compared with 2012. As has been mentioned, it
has been especially transformative for women, low earners and
young people, who historically have been poorly served by, or
excluded from, workplace pensions. The Bill sets us on a path to
do more for all those groups, who will benefit from increased
saving in retirement, with many gaining access for the first time
to employer contributions.
In Committee I spoke about the legislative powers in the Bill,
and the duty placed on Government to consult on how we make the
changes through regulations—both the approach to implementation
and the timetable for doing so. We will report to Parliament on
the outcome of that consultation before bringing forward the
necessary secondary legislation, which will also be debated in
this House. I look forward to engaging with hon. Members on those
details, to ensure that the expansion of automatic enrolment is
done in the right way for employers, workers and taxpayers.
To answer some of the shadow Minister’s questions directly, we
will work closely with employers and trade unions throughout the
consultation process. I have committed previously to launching
the consultation in the autumn. I am not in a position to give an
exact date, but I assure the hon. Member that I will push as hard
as I can to get that as early as possible. Communicating to young
people is incredibly important. Once we are through the
consultation stage and we have a timeline for when we can make
progress, we will work up a plan, and I will return to the House
on that. On a timetable for the legislation to come into force,
the commitment has previously been the mid-2020s, and that is
what we will continue to say. We will have more of an idea once
we have done the consultation process. I hope that answers all
her questions.
In conclusion, it is to the huge credit of my hon. Friend the
Member for Stoke-on-Trent North that he successfully introduced
the Bill on a cross-party basis and navigated its
passage—[Interruption.] There is a first time for everything. I
am delighted to say that the Government support the Bill and will
continue to support it as it moves through Parliament. I wish it
every success.
1.49pm
With the leave of the House, I wish quickly to place a few
thank-yous on the record. First, let me thank the fantastic civil
servants in the Department for Work and Pensions, many of whom
are sitting in the Box today. They have been tremendously helpful
to both me and my team in getting the Bill to where we are today.
I thank the Under-Secretary of State for Work and Pensions, my
hon. Friend the Member for Sevenoaks (), for her fantastic work in
unblocking the blockages that had previously existed to bringing
this legislation forward.
I thank the Opposition Front Benchers, including the hon. Members
for Reading East () and for Wirral South (), for all their support,
kind words and guidance. I thank the Scottish national party
spokesman, the hon. Member for Glasgow East (), who has championed this
measure and is very excited by it. I also wish to thank the
Association of British Insurers, the Pensions and Lifetime
Savings Association and the TUC for all their fine work, as well
as Onward, that fantastic think tank, for the incredible work it
is doing, now led by Sebastian Payne.
I also thank my hon. Friend the Member for Castle Point (), who does not get enough
praise in this House. Without her guidance and stern tongue, I
might not sometimes be able to be kept in line enough to make
sure that we move things smoothly along. So I am grateful to her
for the advice she has provided to get us to this place. I also
place on record my thanks to , who is going to be
taking this Bill on in the other place and guiding it safely
through to Royal Assent.
The final big shout-out needs to go to my office buddy, my hon.
Friend the Member for North West Durham (Mr Holden), who did all
the donkey work, the leg work, for this Bill. I have shamelessly
come in and picked it up after he was sent to such high office
that I see him only once a week, rather than three or four times
a week. I also thank his incredible staff members, Gabriel
Millard-Clothier and Robbie Lammas, as well as my own
parliamentary researcher, Harry Mahoney-Roberts, and Nathan
Purchase in my constituency office, who have suffered with me to
get to where we are today. This is a fantastic piece of
legislation and it will make a change to many lives in the
future.
Question put and agreed to.
Bill accordingly read the Third time and passed.
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