Written Evidence to be reported to the House.
Pensions Bill
9:30 am
James Plaskitt (Parliamentary Under-Secretary, Department for Work and Pensions; Warwick and Leamington, Labour)
Sir Nicholas, we appreciate the kind comments you made about my hon. and learned friend. I will do my best to substitute for him for these clauses.
This group of amendments to clause 8 seeks to insert a new clause and to make associated consequential amendments. The new clause facilitates voluntary pension saving, to workers without qualifying earnings, which means those earning below £5,035 for the 2006-07 earnings terms. We always intended that this group of workers would have a gateway of access to workplace saving and this clause provides that necessary access.
However, these workers’ circumstances are not the same as jobholders’ because they do not have qualifying earnings. Therefore, minimum employer contributions would not arise. Any employer contributions would be voluntary. It would be wrong to automatically enrol workers in this group in pension saving by offering them an employer contribution, as they are likely to have high replacement rates from state provision alone. Some workers in this group, however, may want to save and it may be in their interest to do so—for example if they have previously saved, but have decided for whatever reason to reduce the number of hours they work in the run-up to their retirement, or those combining part-time work with childcare.
In those cases, we want to facilitate easy access to pension savings if these people feel it is appropriate for them. While we would not compel employers to make pension contributions for this group of workers, many employers might volunteer to do so, and indeed some already do. Employers might already offer these workers access to the same schemes as they offer other jobholders, and we want to ensure that these workers have access to pension schemes. In these circumstances, this clause requires employers to enrol these workers into a pension scheme with the same core of requirements that apply to qualifying schemes for other jobholders.
That said, we remain mindful of the potential burdens on business, which is why we would not require employers to enrol a worker more frequently than once every 12 months. The new clause also provides that the process by which a worker becomes an active member of such a pension scheme will be established by regulation. Alongside the new clause are a number of consequential amendments, including amendments to clause 8, to ensure that requirements on the provision of information, deduction of contributions, and compliance apply equally to this group of people.