Clause 18
Pensions Bill
10:30 am
Paul Rowen (Shadow Minister, Work & Pensions; Rochdale, Liberal Democrat)
I accept what the hon. Gentleman says. The argument is finely balanced between accepting a 3 per cent. figure on gross earnings—using gross earnings is fairer when assessing what the exemption rules should be—and accepting that that 3 per cent. will produce a burden for employers and a lot of additional work. If the scheme will be exempt anyway, why should they have to go through the calculations in the first place? That is why, although Turner did not recommend it, it is worth exploring whether a 5 per cent. threshold on basic salary is a fairer way of delivering the benefits that we all want to see. I am interested in what the Minister has to say about the additional work and costs involved in working on—although the CBI wants to move to 3 per cent. of basic earnings—3 per cent. of gross earnings.
Amendment No. 90 is important. It would enable the lower limit of the employers’ and employees’ contributions to be amended by order. We are making calculations for the long term and certain assumptions about take-up and how these schemes are going to operate. The market might change, as might people’s perceptions of what is acceptable. The amendment would give the Secretary of State—with the approval of the House by resolution, because we believe that these are important matters that should be debated—the power to amend the set level of contributions. That is important.
Many employers’ schemes pay more than the 3 per cent. that we are talking about. If there is evidence of levelling down, we believe that we should have the ability to amend the contributions that are made. There is certainly evidence that that could happen and it would be very regrettable. We are not saying that it is going to happen—we are not saying that it is inevitable—but, given that research has raised concerns about whether there will be levelling down, we would like to be able to have a debate in the House to set those figures. The decision may well be taken a long way down the line when evidence becomes clearer. However, we believe that such a provision in the Bill would allow for a proper debate in Parliament.