Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2021

Baroness Bowles of Berkhamsted Excerpts

Thursday 25th February 2021 Lords Chamber

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I thank the Minister for introducing this statutory instrument. The content is in many ways predictable and, I fear, my comments may be too. Having established the precedent for the qualifying earnings band to align with national insurance contributions lower and upper earnings it is no surprise to see that alignment is retained, and I see the obvious benefit of the simplicity that creates in adjustments for PAYE. It is also no surprise that the automatic enrolment trigger remains at £10,000.

The effect of that over time, as pay and everything else rises, progressively brings more people into pension savings in real terms. Although it seems one reasonable way to do that, I am afeared for the reasons that were just outlined by the noble Lord, Lord McKenzie, with regard to how to get more women saving for pensions. Just relying on, if you like, the indexation effect to mean that £10,000 effectively becomes less does not give sufficient acceleration. I would be pleased to hear more about what might happen in the mid-2020s, because it seems that it will be difficult if it is done in a big jump. But if it is done in incremental stages, we might be here in the 2030s with many people still losing out.

It is a great pity that there is an enlarging gap between that £10,000 and the income tax threshold, and that more people are at risk of being put into the unsuitable and somewhat misnamed net pay enrolment scheme, where they are not getting tax relief. The Government are aware of that problem and the call for evidence on pensions tax relief administration closed on 13 October. Can the Minister enlighten us about whether there have been any conclusions on how to stop the lowest paid being diddled out of a significant chunk of their pension contribution and eventual pension because of the administrative choices of their employers? Are there going to be checks on employers when they choose their system, to see how many employees they might have who would fall into that trap, or are we even going to get a nice surprise in the Budget: that HMRC will make it right? It is not beyond its power to do so.

That probably concludes the things that I have to say, except for one thought. Is it possible to find more ways to encourage those who are near the £10,000 threshold and then fall below it—so that they get unenrolled, then re-enrolled when they go above it—just to stay in, given the benefits of doing so? That is a way in which we can make sure that more people stay in and get their pension. It is also a matter of some urgency to address the age limit at which we encourage people to start saving. I do not see much of a reason for delaying that.

I apologise for my ignorance here, but can the Minister enlighten me about what interaction there is between how benefit assessments are made and pension payments? Is there any account or effect there? I feel I ought to know, but I am afraid I do not.