New Clause 8 - Information about pensions

Pensions Bill [Lords] – in a Public Bill Committee at 10:00 am on 14 July 2011.

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‘The Secretary of State shall create a single place where all relevant information of pensions is available for employers and employees.’.—(Teresa Pearce.)

Brought up, and read the First time.

Photo of Teresa Pearce Teresa Pearce Labour, Erith and Thamesmead

I beg to move, That the clause be read a Second time.

New clause 8 is relatively simple and will not take a huge amount of debate. One of my concerns, which I have raised on a number of occasions, is that to get people to do something that they had not considered doing—for example, go into a pension scheme—they need as much information as possible. People need to have misconceptions swept away, and the way to do that is to have clear information. It is not only about the employees; it is about the employers as well, because in the future there will be—I am sure we will get them—numerous letters in our postbags from small employers who see this as a problem for them. The more information that can be given to people and the more it can be made clear that this is a benefit for employees and employers and good working relations between the two, the better.

One of the reasons I tabled the new clause is because, although people are auto-enrolled at three months, they can enrol from day one if they wish, but I am concerned that people will not be aware of that. If, at some future  point, pots of money can be moved from one fund to another—I hope that will come to fruition—it will be important for people to enrol as soon as possible. I am worried that they will not be told that by their employer, or that they will not know, or that they will get wrong information from their friends in the pub.

For those reasons, I want to see the Government ensure that there is an easy-to-understand single place where all that relevant information is. It could be web-based. I am impressed with the NEST website, which is all in plain language, simple to understand and has examples of types of people, so that everyone can look and see someone similar to them and how it will affect them. NEST, as has been said, is only one player in the field. We need to build on what has happened there. The Government need to have something, whether it is part of DirectGov or something else, to ensure that people have the right information, so that they do not hear things from their friends in the pub and get convinced that this is not for them.

This is an absolute sea change in pensions for low and middle earners. I welcome it. I hope it works. For people to be informed and to be able to make informed judgments is the most important thing. I look to the Government to ensure that that happens.

Photo of Rachel Reeves Rachel Reeves Shadow Minister (Work and Pensions) 10:15, 14 July 2011

I thank my hon. Friend the Member for Erith and Thamesmead for tabling this new clause, which raises the issue of communicating auto-enrolment and NEST to employers and employees. I know that the Federation of Small Businesses has raised the issue of ensuring that employers, particularly small and micro-businesses, which have little experience of pensions, have the information that they need, particularly given the level of fines for non-compliance. The new clause would particularly benefit the smallest of businesses.

The Government and the Pensions Regulator must ensure that small employers in particular are aware of the new requirements on them that the Bill creates. To make auto-enrolment work, what funds will be available to ensure that the proper scale of communication and guidance is in place for employers and employees in advance of auto-enrolment being rolled out? Who is principally responsible for getting that information out there: is it NEST, the Pensions Regulator or the DWP?

Having spent such an enjoyable time together in this room going through the Bill, I know that we are all well versed in auto-enrolment, state pension ages, Pensions Commission reports and the Johnson review. We also know that many people outside this room, despite clamouring to get copies of Hansard, are less aware of the subject, particularly small businesses which are more interested in making widgets than providing pensions. It is important that we do everything we can to make it as simple as possible. Communication is an important part of that, if we are to achieve the objectives of auto-enrolment, which intends to get some 7 million people saving who are not currently doing so.

The new clause discusses “a single place” for relevant information. What steps is the Minister taking to ensure that auto-enrolment, as well as the time scale over which it will be carried out, will be clearly publicised to relevant employers and employees? Clearly, the roll-out of auto-enrolment means that it is big businesses that will be automatically enrolled first, so we have a chance to get to the smaller businesses and the micro-businesses.

Photo of Andrew Bingham Andrew Bingham Conservative, High Peak

I do not know whether the hon. Lady is aware of it, but the NEST website, which employers and employees can sign up to, is a fantastic online facility that enables people to learn about their pension investments. In terms of general awareness, I have spoken to NEST and they are coming to my constituency in September to do a seminar for small businesses explaining what it is all about. The help is there if we ask for it.

Photo of Rachel Reeves Rachel Reeves Shadow Minister (Work and Pensions)

I thank the hon. Gentleman for his intervention. I know that he is particularly concerned that small businesses are advised appropriately, and I am pleased that he has encouraged NEST to visit his constituency to help them. That would benefit small businesses in all our constituencies. The NEST website, and its communication, is excellent, but people need to know that the site is there and relevant to them in order to visit it. Automatic enrolment will not impact small businesses for a couple of years or more. In time, hopefully some small businesses will go to the NEST website to find out what it has to offer, but how can we be more proactive in telling them? Road shows and so on are a good way to do that, but I wonder what other ideas the Minister has about how to be as effective as possible.

We highlighted, in relation to clause 1, the confusion that some people have about their state pension age and the impact of the changes in the pipeline. Given the vast changes that automatic enrolment brings, the onus is on the Department. I recognise the difficulty of changing departmental websites and so on. However, how can we put all the information people need in a single place, and how do we signpost people to that information?

Looking from an employee perspective, how do we ensure that people are aware of the three-month waiting period proposed in the Bill, and that individuals have the right to opt in during the first three months when their employer operates the waiting period? How do we ensure that that right is meaningful? In order for it to be so, employees must know that they can opt in and have full information available so that they can make an informed decision on whether it is in their interest to opt in during a waiting period. If they think it is in their interest they must have the information to enable them to exercise that right. How does the Minister envisage communication with employees—informing them about automatic enrolment, whether it is the best option for them and how they can exercise the right to enrol voluntarily during a waiting period—will take place?

I believe that a single hub of information could be an important step in ensuring that the right to opt in is taken up by as many jobholders as want to. Obviously not all will, but if they are given the information they can make a more informed decision.

To sum up, we have had a useful debate about making automatic enrolment and NEST work, and about ensuring that employers and employees get the information that they need. I think a hub of information would be beneficial, but if we proactively target small and micro-businesses and employees with little experience of pensions then automatic enrolment could be the success that it should be. It could also build the confidence of small businesses that do not have much experience of pensions and are perhaps worried about complying with legislation  of which they have little knowledge. How does the Minister think we might address those issues to make it as simple as possible for them?

Photo of Steve Webb Steve Webb The Minister of State, Department for Work and Pensions

I hope to offer a fulsome response to the amendment, which is valuable and on the important issue of communications. I am not sure that we need a statutory duty to have a set of information on a website because the goal of our communications strategy is clearly much broader than that. One of the issues with  websites is that you have to know to go to them, as the hon. Lady said. While we need a repository of information available, we need to do much more to be proactive in communicating to people the information that they need.

10.25 am

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at One o’clock.