Automatic Pension Enrolment

Peter Gibson Excerpts

Wednesday 26th January 2022 Westminster Hall

[Peter Gibson (Darlington) (Con)]

It is a pleasure to serve under your chairmanship, Mr Dowd, and to be called to speak in today’s debate, which has been so ably led by my hon. Friend the Member for Grantham and Stamford (Gareth Davies). The debate raises an important issue and I congratulate my hon. Friend on securing it. It follows on from the excellent ten-minute rule Bill recently introduced by my hon. Friend the Member for North West Durham (Mr Holden).

When auto-enrolment was introduced, I recall being fearful of the impact it might have on my business at the time, and of the costs that it would pass on to me as an employer, but auto-enrolment has proved to be a huge success, reversing the decline in workplace pension saving and ensuring that millions more people are now saving for their future. I saw at first hand the benefits that the scheme has had on the lives and futures of my employees. Employees who would never have considered being part of a pension scheme were put in a position where it became a simple and easy process. For the first time, they were ensuring that they did not fall into the trap of under-saving for retirement, encouraging self-reliance and responsibility.

There are still huge numbers of hard-working people who are not auto-enrolled in pension schemes, with many excluded on the basis of youth or purely because they are not working enough hours or earning enough. For those under the age of 22, the numbers are woefully low. Among those in part-time employment, although some will earn more than the £10,000 threshold, the numbers auto-enrolled are still significantly lower than among those who are in full-time employment.

The minimum age of 22 simply does not work for those who choose not to go to university. Why should someone who chooses to start working at 18 not pay into a pension from that age, in the same way as someone who is 22 does? They would have so much to gain from auto-enrolment being extended to them; we have already heard about the magic of compound interest.

The current system also disproportionately affects women and the poorest in our society, who are more likely to be in part-time work and have multiple part-time jobs, like many in my constituency of Darlington. Although Darlington has 1,820 employers, with 26,000 employees auto-enrolled, I am encouraged that the proposed extension advocated by my hon. Friend the Member for Grantham and Stamford would add almost 900,000 extra savers across the country. Those workers are often employed in industries, such as hospitality or retail, that have faced huge difficulties during the pandemic, but are in many cases the backbone of our workforce. It is only right that we do all we can to ensure that they do not miss out on future financial security; that is levelling up.

Extending auto-enrolment could add trillions to the nation’s pension pot. It is a chance to ensure that people start to save for their future while they are young. It also allows us to ensure that the poorest in society have a more secure future and takes steps towards closing the gap between men’s and women’s pension savings.

In 2019, I stood on a manifesto to level up communities across the United Kingdom and the extension of auto-enrolment is a policy that has the potential to have a really positive impact on people’s futures. It would be a commitment to level up for the long term.

As we contemplate how auto-enrolment can help us deliver on our levelling-up agenda, we must not forget the role of pension companies and the positive impact that these changes could have on their work. Auto-enrolment increases the resources available to them and provides a steady, long-term stream of capital for investment across the UK—investment that can be directed to the communities that are home to those who currently miss out on auto-enrolment, letting them see the benefits of their own savings.

I know that the extension of auto-enrolment would have huge benefits for many people in Darlington and across the country, so I hope that the Government will give this policy real consideration, as we continue to build back better from the pandemic and level up our country.