Draft Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2018 Draft National Employment Savings Trust (Amendment) Order 2018

Jack Dromey Excerpts

Tuesday 6th March 2018 General Committees

[Jack Dromey (Birmingham, Erdington) (Lab)]

The Minister will forgive me if I say what I said in a debate in Westminster Hall this week: auto enrolment was the creation of a Labour Government, but this continuity in public policy is very welcome and is supported across the House. The proposals are entirely unobjectionable and we will not oppose the two orders.

As is appropriate on occasions such as this, I will briefly set out some issues and ambitions for the next stage. First, auto enrolment does not cover the self-employed or workers in the gig economy. Female workers with disabilities and black and minority ethnic workers are over-represented among low earners, the self-employed, those with multiple jobs and carers. Self-employment and bogus self-employment are becoming increasingly prominent in the modern economy, so tackling the issue at the next stages will be of the highest importance.

Secondly, the advent of auto enrolment has increased the number of workers saving for retirement. More active savers are now in defined contribution pension schemes, rather than defined benefit schemes. While having a greater number of savers is a positive move, we do not want to threaten good DB schemes.

Thirdly, the rise in the number of pension savers is a step in the right direction, but DC plans must continue to evolve to provide savers with an adequate pension. A report by the Pensions Policy Institute in 2016 found that the median saving of DC scheme members could yield only £3,000 a year as an annuity, which is not a lot of money. Eight per cent should not be the summit of our ambitions and the sooner the age threshold is reduced, the better.

In conclusion—and fourthly—more workers having access to a pension pot is welcome, but the public’s awareness and knowledge of their pensions needs to increase at the same time. As one of the proposals put forward, and referred to by the Minister, carrying out research is welcome as, in different ways and on different fronts, these are issues that need to be addressed at the next stages. Having made those points for the record, we will not oppose the orders.