Saving for the Future

Work and Pensions – in the House of Commons at on 5 February 2024.

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Photo of Flick Drummond Flick Drummond Conservative, Meon Valley

What steps his Department is taking to help people save for the future.

Photo of Craig Tracey Craig Tracey Conservative, North Warwickshire

What steps his Department is taking to help people save for the future.

Photo of James Sunderland James Sunderland Chair, Select Committee on the Armed Forces Bill

What steps his Department is taking to help people save for the future.

Photo of Mel Stride Mel Stride Chair, Treasury Committee, The Secretary of State for Work and Pensions

Automatic enrolment has succeeded in transforming pension savings, with more than 11 million employees being automatically enrolled in a workplace pension since 2012 and an additional £29 billion in real terms saved into marketplace pensions in 2022 compared with 2012.

Photo of Flick Drummond Flick Drummond Conservative, Meon Valley

I was very pleased when the Government brought in auto-enrolment for pensions in 2012, as making sure that everyone saves for a pension should prevent pension poverty. What is the rate of take-up of these pensions and what provisions are the Government putting in place to help those on low wages build up a pension pot to help provide a decent income in retirement?

Photo of Mel Stride Mel Stride Chair, Treasury Committee, The Secretary of State for Work and Pensions

The increase in take-up since 2012 has been extraordinary, particularly among women, for whom the rate was 40% in 2012 and is now 86% and in line with men. My hon. Friend will know about the 2017 review that we conducted on auto-enrolment. As and when we bring in those changes, that will mean 3 million more people auto-enrolled with £2 billion of additional savings each year.

Photo of Craig Tracey Craig Tracey Conservative, North Warwickshire

I am chair of the insurance and financial services all-party parliamentary group, and financial inclusion has been one of our key areas of focus, particularly following the pandemic which showed that anybody has the potential to quickly become vulnerable. What are the Government doing to increase the financial resilience of our constituents and make them best placed to cope should such an unforeseen event happen again?

Photo of Mel Stride Mel Stride Chair, Treasury Committee, The Secretary of State for Work and Pensions

May I first recognise the fantastic work my hon. Friend does on financial resilience? The Government have, through very difficult times, come forward with £104 billion of cost of living payments between 2022 and 2025. I would point my hon. Friend to one particular scheme: the help to save scheme encourages low-income households to save and we have recently extended that by 18 months, until April 2025.

Photo of Stephen Timms Stephen Timms Chair, Work and Pensions Committee, Chair, Work and Pensions Committee

I agree with the Secretary of State about the cross-party success of auto-enrolment, which has doubled the proportion of eligible employees saving for retirement, but we know that the current regular auto-enrolment contribution of 8% of earnings is not enough to deliver the standard of living in retirement that most people hope for. Does the Secretary of State recognise that that minimum level of contribution will need to be increased?

Photo of Mel Stride Mel Stride Chair, Treasury Committee, The Secretary of State for Work and Pensions

The contribution rates of the employer and employee are a very important matter, and we keep both under review.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

Thank you, Mr Speaker.

When I was 16, my mother took me to Danske bank—or Northern bank as it was then—and opened an account for me. When I was 18, my mother phoned up the pension man in Ballywalter and told him I needed a pension. My mother has been a big guide in my life. What would the Secretary of State say to encourage the young people of today to take their mother’s advice on opening bank and pension accounts and planning for the future?

Photo of Mel Stride Mel Stride Chair, Treasury Committee, The Secretary of State for Work and Pensions

I think the response to that is, always take your mother’s advice. I always did—and look where it got me. At the age of 16, I would have thought the hon. Gentleman would have been saving into a piggy bank, putting his little pennies in a porcelain pig. I direct him to the gov.uk website, where there is a plethora of information for young people and those of all ages about saving and what the Government are doing to assist.

Photo of Gill Furniss Gill Furniss Shadow Minister (Work and Pensions)

One of the simplest ways to get people saving for the future is by ensuring that they are enrolled in a pension scheme, but all too many are currently excluded from auto-enrolment, particularly women, who are twice as likely to miss out. The Government have known about this problem for years. They first proposed widening the criteria in 2017. Last year, thanks to a private Member’s Bill, the Minister was given the power to do just that, but still we have seen no update on when this will be implemented. Can the Secretary of State shed light on when these vital changes will take place?

Photo of Mel Stride Mel Stride Chair, Treasury Committee, The Secretary of State for Work and Pensions

The hon. Lady draws attention to savings for women. I have already stated that 40% of women invested in workplace pensions back in 2012, and that has skyrocketed to 86% today. There are now 2.3 million employers providing pensions through the auto-enrolment route, and there is £29 billion more in workplace pensions in 2024 than was the case in 2012. The hon. Lady refers, I think, to the 2017 review, which I have already referred to. That is currently under review.