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

Lord Bourne of Aberystwyth Excerpts

Thursday 25th February 2021 Lords Chamber

[Lord Bourne of Aberystwyth (Con) [V]]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Drake, who has such broad and deep knowledge in this area. I well remember the powerful contributions that she made to the Pension Schemes Bill, as it was, when it went through the House.

Along with others, I thank my noble friend for setting out the order with such clarity. I join others in noting the great success of auto-enrolment in pensions since 2012, particularly through this difficult period. I understand the thinking behind the decision not to change the qualifying trigger level. I appreciate that in the challenging environment of the last year there has been very little earnings growth. However, as has been acknowledged, freezing the threshold at £10,000 increases the number of people saving into a workplace pension by only 8,000, raising contributions by just a small amount.

Perhaps I may delve a little deeper into the current position on savings more generally. With spending by individuals lower than normal because of the constraints on spending in lockdown and during the pandemic, surely, despite the slowdown in earnings growth, there has been an upswing in savings. Should we not encourage those in employment to save into pensions? Perhaps we are doing that, but I worry about the fact that we are increasing the number of people auto-enrolling by just 8,000. What are the Government generally and the department specifically doing to encourage pension savings? What publicity and education are being provided, quite apart from the auto-enrolment scheme?

It is gratifying that, of the new savers, 72% will be women. This is welcome news, although of course it may well indicate the lower wages of women, as well as, admittedly, a reflection of more part-time working among women, but there remains a challenge to get more women into the auto-enrolment scheme. I wonder whether that statistic worries the Government or heartens them and what the thinking is here.

Perhaps I may also press my noble friend for some broader thoughts on the longer-term thinking of the department and the Government on pensions in general—in particular, on a point made by the noble Baroness, Lady Bowles of Berkhamsted, with regard to what we are going to do with people who, I fear, are in and out of employment in the current challenging circumstances, and how we are going to encourage pension savings in this difficult environment. Those points were also touched upon by the noble Baroness, Lady Drake. I assume that there is a desire to extend automatic enrolment in the future and to lower the trigger for automatic enrolment, but what is the current thinking and the longer-term outlook?

I join others—my noble friend Lady Altmann, for example—in noting the tax trap, or non-tax trap, for lower earners, and the need to incentivise savings for those people. The position at the moment is not satisfactory. I wonder whether my noble friend can give some indication of when the Government are going to get their teeth into this problem and come up with a solution.