Pensions Auto-enrolment

Patricia Gibson Excerpts

Wednesday 28th February 2018 Westminster Hall

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

We can all agree that auto-enrolment has been a positive development in helping to encourage people to save and prepare for their retirement. I have been sitting here and enjoying the unusual consensus. I thank the hon. Member for Chippenham (Michelle Donelan) for securing the debate; I agree with almost every point she made.

A good, clear pension plan is an important tool in tackling existing inequalities that need to be eradicated, with fairness at the heart of our system. If I may threaten the consensus for just a second, in all the talk about pensions and preparing for retirement, I am briefly reminded of the hardships that our WASPI women are going through. They thought they had a little security in retirement, but they found that was not the case. I know that is not the focus of the debate, but it is a reminder of the importance of pensions in people’s lives.

Auto-enrolment is to be welcomed, and everyone supports it, but a number of concerns, which hon. Members have touched on, need to be addressed. As the hon. Lady and others pointed out, progress in ensuring that self-employed people are included in auto-enrolment has been disappointing. The announcement of feasibility testing is positive, but it still risks leaving too many millions of workers behind. That matters because, as we have heard, 4.8 million people in our workforce—about 15%—are self-employed, so the numbers are not insignificant.

As far back as 2004, the Pensions Commission identified the self-employed as a group for which pension provision had always been deficient. The need to include self-employed people in attempts to improve pension provision for that group is hardly breaking news, but it simply has not been addressed. I know the Government have argued that that is a complicated issue—the hon. Member for Chippenham also set that out—but the fact that it is complicated does not mean that it should have been kicked into the long grass for as long as it has. There are too many people losing out on opportunities to build on their financial plans for retirement. The fact that something is difficult is not a reason not to do it.

It cannot be beyond the wit of Government. We have heard others, including the right hon. Member for Preseli Pembrokeshire (Stephen Crabb), tell us that we have a great Pensions Minister. I am sure that it is not beyond the wit of the Minister to try to address the issue of helping self-employed people to navigate their way through that difficulty, as set out by the hon. Member for Chippenham. I agree with her, and others, that it is imperative that those on low pay are covered and included in auto-enrolment, for exactly the same reason. As long as they are not, they are denied the chance to prepare financially for their lives after work.

The 2017 review indicated that bringing the low-paid into auto-enrolment would be of great benefit to those workers, but that will not be implemented until the mid-2020s. Given that we know that the earlier in life someone starts paying into their pension, the better their pension is, we need to make progress on that much more quickly. Those on low pay during their working life must not be denied the opportunity to build up a pension pot for their retirement.

The hon. Lady is absolutely correct that persuading young people to save for their pensions is important. The fact that the inclusion of 18-year-olds in auto-enrolment is not expected to be implemented until the 2020s is also extremely disappointing. With a pension crisis looming for younger generations, those who are now 18 years old will have lost out on precious years of potential pension savings if the issue is kicked further down the road. I agree with the right hon. Member for Preseli Pembrokeshire and the hon. Members for Chippenham, for Horsham (Jeremy Quin) and for East Renfrewshire (Paul Masterton) that that really needs to change.

I would say to the Minister that good progress has been made with pension auto-enrolment and it is right that that should be recognised, as the right hon. Member for Preseli Pembrokeshire and the hon. Member for Horsham pointed out. We have to recognise success when we find it, but there are still whole swathes of the working population who as yet are not eligible for auto-enrolment, and they are at risk of being left without enough years of pension savings if that is not urgently addressed. I know that when the Minister gets to his feet, he will tell us how he intends to do that.

I will end by saying—the Minister will have heard me say this before, if he was listening—that we need a full and independent pension commission, looking holistically at every aspect of pensions, so that we have a system that is as fair as possible for all. We all need to have a system that we can have confidence in and rely on when our working lives are over. We need a pension system that is sustainable and takes into account shifting variables such as life expectancy, which is drastically different depending where in the UK someone lives.

With 1 million pension pots accessed early since reforms enabled that to happen, with the self-employed and young people not included in auto-enrolment until the mid-2020s and with rising life expectancy, the issue of pension provision and pensioner poverty is becoming all the more urgent. That is why I am keen to hear what the Minister has to say on how he will move forward with this.