Automatic Pension Enrolment

Duncan Baker Excerpts

Wednesday 26th January 2022 Westminster Hall

[Duncan Baker (North Norfolk) (Con)]

I thank my hon. Friend the Member for Grantham and Stamford (Gareth Davies) for getting us all up so early—9.30 am on a Wednesday—to talk about our favourite subject, which is clearly auto-enrolment.

I will start by being very rude and saying that we often see private Members’ Bills introduced that are nothing more than political graffiti. However, the one recently introduced by my hon. Friend the Member for North West Durham (Mr Holden) on this issue is far from that, and we should give a great deal of consideration to how it fits with this debate. People might expect me to say that, because I am an old bean-counter. Before I came into this place I was a former finance director, and I remember with utter dread the systems and processes that we had to implement to deal with auto-enrolment.

Although most people tend to glaze over when we talk about pensions—present company excepted, obviously—this idea is really sound. That is because, let us face it, we are living in an ageing population all of the time, and in any person’s view the need to save for our retirement is extremely important; and the crux of the matter is that the sooner someone does it and has the opportunity to do it—two important parts of what we are discussing today—the better for society. After all, many people will have in their pension savings the highest asset that they will ever hold.

The other reason that this debate is so important to me is because I am going to do something that not many MPs do in this place—admit how wrong I have been about things. Yes, I will now say that I made a mistake. That is because I remember the days when auto-enrolment first came in—my hon. Friend the Member for Grantham and Stamford makes me feel very old, because 2005 feels like a very long time ago—and I remember that at the time I thought, “What a waste of time auto-enrolment is.” I bemoaned how much it would cost us as a company, and the meaningful contributions that people would make were so small when auto-enrolment first started that it was a total nuisance to administer and I wondered whether it would really make much of a difference, precisely because people’s contributions were so low. In addition, I expected that people would simply opt out—that there would be a knock on the door three months later and someone would ask, “Duncan, can you please take us out of this scheme?” But people did not, and that is because the Government got it right. They made those initial contributions so low that people got used to it.

So, on those two counts, I got it completely wrong. That is why I back what my hon. Friends the Members for Grantham and Stamford and for North West Durham are proposing, because with nearly 90% of people now participating in a workplace pension, old cynics like me have been proved totally wrong. The fact that we now have 10 million workers in an auto-enrolment scheme in this country is a testament to how extremely good auto-enrolment has been. It has created momentum—momentum for people to take responsibility and save for their retirement.

My constituency of North Norfolk is very beautiful, but we have a disproportionate number of lower earners. It is a coastal community; hospitality and retail are very important, and therefore form a chunk of lower earners. Why are we not making it easier for everybody to contribute, to allow younger people—that rump of my workforce—to have that chance earlier? All the statistics show that they will reap the benefits of getting started on that ladder earlier. It is a very simple proposal, but it has far-reaching consequences. If it opens up more people to take that responsibility, to be able to earn for their retirement, I think it is extremely worth considering and I am very happy to back it.