Clause 49

Part of Pensions Bill – in a Public Bill Committee at 10:15 am on 31st January 2008.

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Photo of Mike O'Brien Mike O'Brien Minister of State (Pension Reform), Department for Work and Pensions 10:15 am, 31st January 2008

I am also conscious of a point made by the hon. Member for South-West Bedfordshire that I have not yet dealt with. He asked me whether the regulator, as part of his role, would be looking for unusual patterns of opt-out among employers and employees. The answer to that question is yes, he will be. It is the role of the Pensions Regulator to monitor the data in relation to the level of opt-outs among employers. It will vary from sector to sector, but we anticipate there will be an average level of automatic enrolment, and that will enable the regulator to look for unusual patterns of high opt-outs. It will then be able to intervene with those employers to find out why those high levels are present.

If it is the case that there is a non-unionised, low paid, edge-of-usual sector practice that needs investigating, we would expect the Pensions Regulator to be in a position where it could carry out a serious examination of the circumstances in that employer’s organisation—indeed, for the very competitive reasons that the hon. Gentleman identified earlier.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey asked some important questions about pre-employment rights. We looked at this with a great deal of care and were pressed by the TUC to consider whether pre-employment rights should be present, because it would be theoretically easy for employers to say “We are not offering you a job yet, but we are interviewing you and one of our questions will be: are you going to sign up to the whole pensions deal? If you are, we will take a decision based on that.” So, in effect, before there is a contract of employment, or an agreement, there is a view by the employer that he will take a particular approach to an employee.

That is the problem, and it is one of the reasons why we proposed Govt amendment No. 156, which we just dealt with. It gives the employee the ability to have had an inducement, to have accepted the inducement—in the sense of accepting any “bung”, as the hon. Member for South-West Bedfordshire put it—and then, as soon as he is employed, to say “Fine, thank you for the bung, I’m going to keep that, but I now want to be automatically enrolled in the pension scheme” and there is nothing that the employer can do about that.

If we decided to create a new pre-employment right, then the concern of employers’ organisations would be that there has been pressure in the past to create all sorts of other pre-employment rights. While I did not detect a great objection to this particular one, it was to some extent a matter of principle for them, that creating a pre-employment right in this regard would then raise the question, “If you do it on this, why are you not doing it in a whole series of other circumstances?” That would be quite a significant change of principle in terms of the way we have operated employment legislation heretofore.

So I think the best approach is to put in place mechanisms to provide back-stop assistance for employees who wish to be properly enrolled, and ensure that we  have some financial sanctions for dealing with employers who seek to offer inducements. The Conservatives have suggested that we go further than that, and have criminal sanctions as well, but these would relate to post-contractual rights.