Automatic Enrolment: Lower Earnings Limit

Part of the debate – in Westminster Hall at 4:42 pm on 12th March 2019.

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Photo of Angela Crawley Angela Crawley Shadow SNP Spokesperson (Disabilities), Shadow SNP Spokesperson (Pensions), Shadow SNP Spokesperson (Youth affairs), Shadow SNP Spokesperson (Children and Families), Shadow SNP Spokesperson (Equalities) 4:42 pm, 12th March 2019

I wholeheartedly agree. The Government have been remiss in their responsibilities to address those epidemic concerns that have increased during their stewardship in government.

I will turn to the concerns that I have outlined, including those of women, low-paid workers and the WASPI women, on whom the Government have a shambolic record. Low-paid workers, including those who have multiple jobs that do not meet that threshold, are more often than not below the earnings threshold and do not therefore meet the criteria for auto enrolment. There is no mechanism for auto-enrolment for the self-employed.

Another group of individuals has also been completely forgotten in this programme. There is a duty to enrol for those aged between 22 and the state pension age. Those in the six-year gap between the ages of 16 and 22 will therefore be adversely impacted by that decision. The Government acknowledged that problem, but addressed it by saying that many people in that age group tend to move jobs a lot, so it is not administratively worthwhile to account for them in the programme.

What do the Government say, however, to a young person who goes into a full-time permanent job at 16? Are they not entitled to pension contributions? The UK Government have said that they will lower the age to 18 by the mid-2020s. Can the Minister tell us exactly when that will happen?

The contribution is currently set at £6,032, going up to a threshold of £46,350. That has been on a phased increase since 2012. In reality, the minimum recommendation that is currently estimated for pension savings is 15% to 18%. If the Government were to remove the lower earnings limit, it would add £2.6 billion to the annual pensions pot. That would still account for only 8% of the estimated required pension savings. That means a shortfall of 12%, on average, for each individual of working age in the UK. The Government have to address that.

The Minister himself, however, has admitted that 8% is not a sufficient contribution for a long-term retirement, and the Government’s own figures suggest that approximately 12 million people are under-saving for retirement. I hate to take words out of the Minister’s mouth, but he will probably point to the pensions dashboard to support better planning for retirement. However, for women, low-paid workers, those in multiple low-paid jobs, those aged from 16 to 22 who are in full-time permanent employment, the self-employed, and those on zero-hours contracts who fall below that threshold, can the Government say that they are serving them? For society as a whole, does the existing lower earnings limit sufficiently

“support better planning for retirement”,

to use the Government’s own words? The Government record on WASPI women alone proves that, more often than not, the evidence is that in most instances the most vulnerable in society are an afterthought.