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

Baroness Altmann Excerpts

Thursday 25th February 2021 Lords Chamber

[Baroness Altmann (Con)]

My Lords, I congratulate my noble friend on introducing this statutory instrument and on her clear explanation. I continue to welcome the success of auto-enrolment in making pension saving the norm across the British workplace. I also congratulate my Government and put on record the tremendous achievement that they have brought forward during the pandemic to insist on maintaining, through furlough, the automatic enrolment pension contributions. I am sure there was a temptation to relax that provision but it is most welcome that the Government have recognised the importance of continuing auto-enrolment uninterrupted, albeit at the furlough level. Will my noble friend comment on whether any measures are planned or in place to widen education and guidance in the workplace to run alongside auto-enrolment, so that people are helped to understand their pensions while they are paying money in?

I also support the aim of good value pensions. Indeed, master trust consolidation is aimed at helping in that regard by achieving economies of scale. However, what can we do about data reconciliation and accuracy for past records and future contributions? Is there an appetite within government to make sure that not only are employers required to pay contributions, and that the regulator checks that they are paying them, but that there are proper, regular, mandatory requirements for checking that the amounts being paid on behalf of each worker are correct? At the moment, there are no such checks and we are well aware that even recent auto-enrolment records are not correct. I have concerns that, under GDPR, the data for auto-enrolment may not be being kept for more than four or six years. If my noble friend could write to me on that, that would be fine.

I recognise that the cost of this SI, at £14 million, in the context of overall pension contributions, which are in the region of £38 billion, is not significant. Indeed, the employer/private sector addition of £5 million is not onerous—but the people who benefit from this SI are the higher earners, whose upper threshold has gone from £50,000 to £50,270.

I support the aim of aligning the national insurance lower and upper limits with the automatic enrolment contribution records, making it easier to administer, but, as the noble Baroness, Lady Bowles, pointed out, there remains a major problem for the lowest earners, most of whom are women. More than 1 million are caught up in this problem of net pay schemes, which are, indeed, misleadingly named. They force these lowest earners to pay 25% extra for their pensions. They do not receive less pension, but they have to live on less than they should, and their take-home pay is lower than it should be as a direct consequence of the scheme that their employer chose. These workers are often unaware of this, as, often, are the employers. Can my noble friend let us know when the Pensions Regulator and the Government will act to stop this and when we might find a resolution, as already proposed to the Treasury by the action group that I am a part of? That would at least remedy the injustice faced by these lower earners.