Saving for Later Life

Debate between Margaret Ferrier and Stephen Timms

Tuesday 7th February 2023 Westminster Hall

[Sir Stephen Timms]

The hon. Gentleman is right. The Government have usually—not always—applied the triple lock correctly, but it is absolutely vital that people build their own pension savings on top of that. Otherwise, a lot of people will get a very nasty shock when they reach retirement, and at that point it will be too late to do anything about it.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

Understanding someone’s private pension is quite complex, particularly if they have had more than one job and been in several schemes. Does the right hon. Member agree the work that the Department for Work and Pensions is doing to deliver a dashboard with industry will allow people to access all that information?

[Sir Stephen Timms]

That is very important. We are expecting quite significant progress on the dashboard this year. The Select Committee will, I hope, be taking evidence about that in a session quite soon. That will be an important step, when it finally becomes available.

We recognised in our report that with the cost of living crisis now is not the right time to increase everybody’s pension contributions, but the ground needs to be prepared for increases in future. To quote the Financial Inclusion Commission, we need a “light bulb moment” to alert employers and the public to the gravity of the current under-saving problem. We need to start building a new consensus on what an adequate retirement income is and what is needed to deliver it.

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[Margaret Ferrier]

Last year, I carried a private Member’s Bill through the House to Royal Assent.  That legislation addressed sex-based inequality and guaranteed minimum pensions, which is just a small aspect of the pensions pay gap. Does the right hon. Member agree that because women are likely to earn less than men, and therefore their pension contributions will be lower, further and widespread work is required?

[Sir Stephen Timms]

Yes, I think the hon. Member is quite right. It is not just that women’s earnings are lower and therefore their pension contributions are lower; a lot of women earn below the current auto-enrolment earnings threshold, so they do not save anything at all. NOW: Pensions says that of the 14.6 million employed women in the UK, 17% do not meet the automatic enrolment criteria, compared with 8% of male employees. That is a big part of the problem as well and, as the hon. Member said, it is very much tied up with lower earnings.

I warmly welcome the announcement that the Department is working across Government to develop a coherent framework for assessing this gap and to find a definition to enable the measurement of progress to reduce it. Will the Minister tell us when she expects that work to be complete? In her helpful letter to the Work and Pensions Committee, which was published yesterday, she said that she was looking at

“regular reporting on the gender pension gap….to better highlight the issue publicly.”

When does she expect “regular reporting” to begin? When she says “regular reporting”, does she envisage that happening annually?

Auto-enrolment has been a big success in increasing the number of workers saving in a pension, but there is a lot more to do for the pension system to deliver adequate retirement incomes. The Department agrees with the Committee on the problems that need to be addressed; now we need to get a move on and address them. After the 2017 review—some six years ago—the Department said that its focus was

“for individuals to keep saving and to save more after minimum contributions reach 8 per cent in 2019”

and

“to ensure that younger people, part-time workers and the self-employed can achieve more security in later life.”

Momentum has now stalled. The Department has not even progressed the recommendations of that review. In winding up, will the Minister make a start by telling us when the Government intend to make progress on those recommendations?