Pensions (Extension of Automatic Enrolment)

Richard Holden Excerpts

1st reading
Wednesday 5th January 2022 Commons Chamber

[Mr Richard Holden (North West Durham) (Con)]

I beg to move,

That leave be given to bring in a Bill to extend pensions automatic enrolment to all jobholders aged at least 18; to remove the lower qualifying earnings threshold for automatic enrolment; and for connected purposes.

As the Prime Minister said today at Prime Minister’s questions, what we have seen over the past few years—worked on since our time in opposition and introduced under the coalition Government—is a huge increase in pensions take-up among the British population. Now, 10 million more people are saving for their pensions than did before: an increase from 46.5% of the population saving in 2012 to 77.6% in 2020. By any stretch, that is a massive increase and a huge boon to people in our country who are saving for the long term.

Bringing forward the Bill is all about ambition—not mine, but the ambition of people to look after themselves, their families and their communities. I know many red wall MPs such as myself and my hon. Friend the Member for Sedgefield (Paul Howell) think about that. People are ambitious not just for themselves, but for the towns and villages they live in. In my patch, from Consett to Crook, Burnhope to Langley Park, they are ambitious for themselves, for their towns and villages and for those who live in them, their friends and neighbours. Many of those people are excluded from auto-enrolment purely because they do not earn enough money to be enrolled.

The other reason I mention ambition is that this measure is the Government’s stated aim. They have an ambition to start to extend auto-enrolment by the mid-2020s, but, as everybody who has ever seen some of those great comedy programmes will know, and I remember Malcolm Tucker saying it:

“‘Should’ does not mean ‘yes’.”

I really want the Government to say yes to this proposal. People need to know that it is going to happen. Business needs to be able to plan for it. Our country needs to feel long-term levelling up in action, and one of the best ways we can do that is to give people certainty that this is coming down the track and that their pensions will be there for them, providing for them.

I am grateful to Onward for its help in the past few months, working with me on the report it has published today on some of the specifics that the Bill will provide. The key is the extra £2.77 trillion that would be invested in our pensions for the lower-paid and younger workers who the Bill seeks to address. That money would be saved by people in part-time work or aged 18 to 22 who do not qualify for auto-enrolment.

I will give the House a couple of statistics to highlight why that is so important. At the moment, three quarters of those aged 22-plus are auto-enrolled into pension schemes, but under the age of 22 it is only 20%—and that is 20% of people in work, not students. That is a big difference, and the difference that auto-enrolment has made since 2012. For part-time workers, while some will earn more than the £10,000 threshold, auto-enrolment is 57.8% compared with almost 90% of workers in full-time jobs. If we assume a similar take-up, the Bill could see an extra 30% of the part-time workforce auto-enrolled: millions of people, mostly women, and much more likely to be from ethnic minority communities, to be socially disadvantaged or to have other burdens on their time, maybe as carers. Those are the people the Bill seeks to address and make a difference for.

Where are those part-time workers? The analysis Onward has done shows exactly where they are. They are in places such as Workington in Cumbria, or Hyndburn in Lancashire, or Mansfield in Nottinghamshire, as well as large parts of the south-west, the midlands and the north-east and north of England. They are in areas of the country that seek that levelling up and transformational change more broadly.

I want to give a few short examples of the people that we are looking to help. A full-time worker on the national living wage would gain almost an extra £100,000 into their lifetime’s pension—a 60% increase on today. As for younger people, if the average person working full time on the living wage between 18 and 22 paid in just a few hundred pounds a year—literally a few pounds a week—in between those years, they would see another £25,000 in their pension on retirement. They would pay about £1,000 or £1,500 in and have £25,000 coming out, because compound interest would build up over 45 to 50 years. That will make a transformational difference to people’s lives in retirement.

This is the one that really gets me: workers with two part-time jobs. At the moment, people earning £9,000 for two jobs, maybe working 12, 16 or 18 hours a week in my constituency, do not get the real benefits of auto-enrolment at all. A woman doing two different jobs, juggling them around childcare, would see her pension savings triple under this proposal, from under £100,000 to £300,000. Think of the transformation to that woman, aged 65. With £300,000 she might be able to give a deposit to her kids and also have a much more comfortable retirement than she would with the savings that she has at the moment. The change that has been made so far by the Government through auto-enrolment and its expansion has been fantastic, but now we need to go that step further to help people who are the backbone of our country.

The big differences are also particularly stark because at the moment that woman earning £18,000 a year working two jobs does not get the benefit, but someone earning £180,000 does. She does not get that tax benefit, but that other person does. How can it be right that we give tax benefits to Members of this House or well-paid people across the country but not to people working part time? It just does not seem fair to me.

Before I wind up, I would thank the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), who is ill today so cannot be here, and the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Mid Sussex (Mims Davies), who is here in his place. We have talked about this, and I know that the Department have the ambition and are now looking at the idea. I also thank the Secretary of State and her team, with whom I have also talked about it.

I thank James Blagden and Will Tanner at Onward for the huge amount of work that they have put into the report over the past few months; it has been really welcome in bringing out some of those key numbers and statistics. I would also like to thank Aviva who, with some of their actuaries, helped behind the scenes as well. That has been very welcome, because drilling down into some of the pension numbers and how they impact people over decades is sometimes very challenging.

If we want to level up for the long term, this is a serious piece of legislation that could make serious change. I sat recently in proceedings on a private Member’s Bill and the Pensions Minister stood at the Dispatch Box, and the hon. Member proposing some changes said that introducing those changes was initially thought of in 1978, and then in the late 1990s—and it is only now that they are being brought forward in a private Member’s Bill. I do not want this long-term levelling-up measure, which would benefit some of the lowest-paid in our society, to slip, too, because there is always a reason not to do it. The answer is that we must table legislation now so that business can prepare for the future. If we are to build back better after this covid pandemic, there is no better way, particularly to help low-paid workers, many of whom, in constituencies like mine, will have been working in the care sector, the retail sector or hospitality throughout this period. They are the ones who will directly benefit from the legislation.

This legislation would transform the lives of millions of working people—not in great jobs but in low-paid work—who are the backbone of our country. The Prime Minister said in the constituency of my hon. Friend the Member for Sedgefield that votes were lent to us at the last general election and we have to deliver for those people. I think the Bill is one of the clearest ways that we could do so, and I commend it to the House.

Question put and agreed to.

Ordered,

That Mr Richard Holden, Matt Vickers, Simon Fell, Gary Sambrook, Dehenna Davison, Paul Howell, Mark Jenkinson, Duncan Baker, Sally-Ann Hart, Antony Higginbotham, Dr Jamie Wallis and Mrs Natalie Elphicke present the Bill.

Mr Richard Holden accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 25 February, and to be printed (Bill 221).