Pensions

Stephen Timms Excerpts

Monday 1st March 2021 Commons Chamber

[Stephen Timms (East Ham) (Lab) [V]]

I understand the case for stability in the course of the pandemic; that is represented by the order and I would not quarrel with that at all. However, the order does raise a number of issues about the Government’s longer-term intentions on auto-enrolment, which others have raised and which the Minister touched on, and I would like to ask him about that.

On freezing the earnings trigger, again, £10,000 probably represents a very modest increase in the number of people brought into auto-enrolment. The Government’s analysis refers to another 8,000 people, of whom 72% will be women, but the order does not represent any real progress towards the changes set out in the 2017 review, which, as my hon. Friend the Member for Reading East (Matt Rodda) reminded us from the Front Bench, would see contributions made for all employees aged 18 and over from the first £1 that they earn. When the review was published, the Government said, and the Minister reiterated it this evening, that the ambition was to implement those changes before the mid-2020s. We are now halfway from 2017 to the mid-2020s, and it would be helpful if the Minister was able to give some indication to us of when the legislation necessary to achieve that will be made. Is it the Government’s aim to legislate for those changes in the pensions Bill, which the Minister has said he wants to introduce perhaps next year? Is that when we can expect concrete steps to be made?

The previous Work and Pensions Committee recommended in its auto-enrolment report that, as part of their review, the Government should consider

“approaches to increasing contributions beyond the statutory minimum of 8% of qualifying earnings, including mandatory increases in employee and employer contribution rates and means of encouraging greater voluntary contributions”.

Can we look forward to progress along those lines in a 2022 pension schemes Bill as well?

As the Minister knows, and this has not previously been raised in this debate, the Supreme Court recently found that Uber drivers are workers for the purpose of section 54 of the National Minimum Wage Act 1998. That means that Uber drivers are entitled to a minimum wage for the period when they have the app switched on in the area covered by their licence. If they and other gig economy workers are entitled to the minimum wage, they may well also be eligible for auto-enrolment on the terms set out in the order. Auto-enrolment contributions might well need to be paid retrospectively in relation to them. Will the Minister set out what the Government’s view about that is? Are they considering how gig economy workers could be brought into auto-enrolment? Is there a need for legislation to address this, or is it the Government’s view that the existing legislation can do the job?

The Work and Pensions Committee has now launched the second of our three-stage inquiry to assess the impact of the pension freedoms five years on from their introduction, following the first part, which was on pension scams, which I hope we will be able to produce a report on later this month. The third part of the inquiry, which we will launch later in the year, will look at these issues around auto-enrolment for gig economy workers such as Uber drivers and for self-employed people more generally.

The Government launched a series of trials and research exercises around enabling retirement saving for the self-employed at the end of 2018. That followed a report from the Select Committee at the end of 2017, “Self-employment and the gig economy”, which said:

“Low levels of retirement saving amongst the self-employed risk storing up grave problems of potential hardship and reliance on the welfare state in later life. While auto-enrolment for employees has been a great success, current structures are not encouraging sufficient pension saving by the self-employed. The idea of using an opt-out system on tax returns to encourage greater contribution to pensions is an interesting one that merits further consideration.”

Can the Minister, following the trials, which began a couple of years ago now, indicate what the Government’s plans are for extending the success of auto-enrolment to the self-employed?

Those trials involved: marketing interventions aimed at people who previously saved, such as those being automatically enrolled while employed, to encourage them to continue their saving; marketing interventions using trusted third parties for the self-employed, such as trade bodies and trade unions, to promote the value of saving and to provide an easy connection to an appropriate savings vehicle; and behavioural prompts, including testing messages combined with prompts through invoicing services or the banking sector to try to engage self-employed people to think about starting regular saving at a point when they are receiving their income.

What has been learned from those activities over the past couple of years? When will the Government publish the findings? When does the Minister intend to take an initiative based on those findings for the benefit of self-employed people?