Automatic Enrolment (Offshore Employment) (Amendment) Order 2020

Baroness Janke Excerpts

Tuesday 19th May 2020 Lords Chamber

[Baroness Janke (LD)]

My Lords, I thank the Minister for her introduction and welcome the continuation of seafarers and offshore workers in the automatic enrolment scheme.

As other noble Lords have said, the success of automatic enrolment to date has been very clear, with more than 10 million people brought into workplace savings since its implementation in 2012. However, for the continued success of automatic enrolment, the Government must further extend and embed the scheme, as the 2018 review report recommends. For example, the reduction of the lower age limit to 18 and the removal of the lower earnings limit would mean that people could save a further £2.6 billion annually, which shows the importance of savings in early career and their impact on the size of retirement savings.

Scrapping the lower earnings limit would also mean that pension contributions are calculated from the first pound earned, and would bring some 10 million lower earners into pension saving. Many of the workers whom we clap every Thursday would benefit from this. Some 240,000 more people would be brought into pension saving, most of them women, if the earnings threshold were aligned with the national insurance primary threshold. This would reduce the gender pensions gap, which currently means that the average pension pot for a woman aged 65 is one-fifth of a 65 year-old man’s, and women receive £29,000 less state pension than men over 20 years. That deficit is set to continue, all else being equal, closing by only 3% by 2060. We know that large numbers of our women key workers will suffer from pension poverty unless something is done about this.

Will the Government commit to a timetable for implementation of policy to provide certainty to savers, employers and the pension sector? In addition, are the Government considering introducing auto-enrolment for the self-employed, many of whom have no pension savings and whose savings will have been particularly affected by the Covid-19 crisis? Since 2001, the proportion of self-employed in the workforce has increased. At the same time, the number of self-employed people who actively contribute to a pension has decreased steadily since the late 2000s, from 27% in 2008-09, to 15% in 2017-18. Can the Minister give some assurances about this? I fully support these orders.