Draft Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2016

Nigel Mills Excerpts

Wednesday 16th March 2016 General Committees

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to serve under your chairmanship, Mr Percy.

I wonder whether the Minister would care to answer a few questions about how we should take this policy forward in the light of the Budget announcement, which appears to have been trailed, that the Government will introduce a help to save scheme. Effectively, the scheme will give those who are on a pretty low income a 50% bonus if they save a certain amount each month over a certain period. The existing automatic enrolment schemes give people who save into them a 25% taxpayer contribution. People who are pretty short of money and who want to save for their future would perhaps be better off saving with the new help to save scheme, because they would get a 50% taxpayer bonus and would perhaps have the money available to them if they needed it before they retired. Automatic enrolment effectively compels them to join a pension scheme, where they may suffer the downside and the costs of having their money locked away for a long period.

I am a little intrigued, so I wonder whether the Minister would care to say a few words about the direction of savings policy, because it seems a little unreasonable effectively to force people into a savings vehicle that now looks to be a little less attractive than going into a help to save scheme that has a bigger bonus and that would give them more ready access to and control of their money.

I suspect that the answer will be, “Until the Chancellor of the Exchequer announces it, we cannot speculate.” The other answer might be that the pension scheme at least has an employer contribution, but that is effectively a cost to the employer that does not go into the wage pot. I wonder whether this is a sign that the Chancellor wishes he had gone for a tax-exempt pension route and that he is trying to recreate it for the very lowest level of savers, perhaps in a more flexible way.