National Employment Savings Trust (Amendment) Order 2013

Lord German Excerpts

Thursday 28th February 2013 Grand Committee

Finally, the order corrects some minor inaccurate cross-references. I hope that noble Lords will see that a range of different amendments is brought into effect via this order but it is a series of technical changes. I therefore commend the order to the Committee and I beg to move.

[Lord German]

My Lords, I have only one question in relation to the changes in this order. I suppose that I should declare an interest in that my wife works for a small charity which is seeking to become a member of NEST for its employees. However, I do not think that I really have an interest in the sense that I am relating my question to the technical change removing the requirement for the trustee to consider next of kin. Therefore, it is a general question rather than being specifically about me.

The Explanatory Memorandum talks about rules, with a small “r”, in England and Wales, Northern Ireland and Scotland, but further on it talks about doing something differently in accordance with Rules with a capital “R”. In terms of next of kin, what is being changed here in respect of those to whom payments should be made? Why is there a £5,000 limit on death benefits being transferred, and what Rules, with a capital “R”, will apply when the trustee looks at the question of those to whom they should pay sums of less than £5,000?

[Lord McKenzie of Luton]

My Lords, I thank the Minister for introducing this order and I say upfront that we will be supporting it. Perhaps I may revert to an item touched upon by the noble Lord, Lord German, which I was going to raise in our previous debate concerning people’s expectations of pensions, the importance of auto-enrolment and certainly the importance of NEST as a key component of that. When the Turner commission looked at the prospect of auto-enrolment and how employer pensions were to be organised in future, I think that the criteria around contribution levels and the band of earnings to which they applied were struck so that over a working lifetime the required level of replacement earnings would be produced. I am bound to say that with what has happened to the band of earnings, contribution levels have not shifted. I have not seen an update of that calculation and I do not know whether there is one—I think that it is an adjunct to this order—but if there is, it would be interesting to see it.

I have one or two questions in respect of some of the detail. We understand why the discretionary period to allow self-enrolling members to be accommodated is necessary, but can the Minister update us on the current elongated process for enrolment? I do not have that fully in my mind. What is the position of new self-enrolling members at the end of that period? Do they have an unfettered right to enrol? Perhaps we can use this occasion, given that NEST has been up and running for a little while now, although with regard to auto-enrolment larger employers are involved first, to find out whether we have any early numbers for the employers and employees who are enrolled.

We support the lifting of the obligation dealing with cross-border obligations and the other essentially technical amendments. I have a small point on terms and conditions. The Minister said that the proposed change would mean that self-enrolment individuals, as others, do not have to agree to members’ terms and conditions, so what is the purpose of those conditions? What relevance do they have? As for multiple jobs, again we support the change that has been outlined, but what is the position on multiple jobs within the same employer group? There is a maximum of 4,400 but, if that can be exceeded and there can be multiple jobs, are there any constraints if those multiple jobs are within the same group, possibly on a specifically organised basis to circumvent the limit?

With those few small inquiries, I say again that we support the order and are pleased to see that NEST is making progress.