Automatic Pension Enrolment
Debate between Gareth Davies and Peter Dowd(2 years, 9 months ago)
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Peter Dowd (in the Chair)
Before we begin, I remind hon. Members that they are expected to wear face coverings when they are not speaking in the debate. This is in line with the current Government guidance and that of the House of Commons Commission. I also remind Members that they are asked by the House to have a lateral flow test before coming on to the parliamentary estate. Please give one another and members of staff space when seated and when entering and leaving the room.
Gareth Davies (Grantham and Stamford) (Con)
I beg to move,
That this House has considered the matter of automatic pension enrolment.
It is a pleasure to serve under your chairmanship, Mr Dowd. We are considering the matter of automatic pension enrolment, but let us not speak too loudly about it. For the past decade, this has been one of the most remarkable success stories, yet also somehow one of our best-kept secrets. It all began in 2005 with the pensions commission looking out on a bleak private pension market. It knew that we had to act to boost the number of savers and savings in the UK to give people greater security in their retirement. The commission formally proposed, as part of its work, that those over a certain age and income be automatically enrolled in a pension. The Labour party, the Conservative party and the Liberal Democrats all agreed, and after the Pensions Act 2008 was passed the coalition Government carried this through.
The results have been remarkable, transforming the UK pension landscape. For example, whereas the rate of workplace pension participation fell to 55% between 2009 and 2012, that rate is now a remarkable 88%. Today, more than 19 million eligible employees participate in a workplace pension and, together, save more than £100 billion in a single year. More than 10 million people are now saving or saving more, increasing pension savings by an incredible £17 billion. Two million fewer people are under-saving for their retirement than would otherwise have been the case. There has been a 50% increase in participation among the young, between the ages of 20 and 29. The greatest increases in pension participation by earnings have come from low to moderate earners. Let me put it simply. Savers are up. Savings are up. Men and women are participating equally. And the lowest earners have benefited the most.
That is perhaps a sign of what we can do when we work together but other, indirect benefits have been seen. For example, studies have shown that auto-enrolment has eliminated the mental health participation gap. Our fight against climate change has been bolstered: with savings volumes increased, UK pension funds now have more assets to invest in high-growth technology that is green or in renewable energy.