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

Lord McKenzie of Luton Excerpts

Thursday 25th February 2021 Lords Chamber

[Lord McKenzie of Luton (Lab) [V]]

My Lords, I thank the Minister for her clear introduction to this order. As we have heard, it deals with the statutory requirement placed on the Secretary of State to review the earnings trigger and the qualifying earnings band, which are key components of the automatic enrolment process. We note that the Secretary of State returned to the three principles established in the first two reviews, in particular a judgment on whether the right people will be brought into pension saving.

This has led to determinations that the trigger should remain at £10,000, the lower limit of the qualifying earnings band and the national insurance contribution lower band. As far as these are concerned, there is no change. Perhaps the Minister will say why it is not considered appropriate to take forward the 2017 review proposal of removing the lower limit. She referred to it in her introduction, but we would appreciate more detail. Is it still the policy to remove this band in due course? The documentation we have advises that the methodology for the review has changed and that a new internal model of the DWP is in use. Perhaps the Minister will expand on the consequences of this and what it means for this review. Can she say who it considers are the right people to be brought into pension saving?

The overall impact of the proposed thresholds next year, so far as participants are concerned, is calculated to be of the order of a further 8,000 brought into pension savings and, in terms of contributions, a total of £14 million. This seems a considerable loss of momentum in the arrangements for auto-enrolment. Marking time on the review has implications for the gender balance of these arrangements. We are told that 43% of participants in the baseline are women and that it would require a downward shift on the earnings trigger to improve that position. What strategy can the Minister offer to address this and the other inequalities the analysis sets out?

I heard what the Minister said about the implications of the pandemic and support for companies. It would be good to hear quite who is meant to pick up the cost of the various components of this in due course.