Pensions

Auto-enrolment has been a positive development for savers' long-term prosperity. The Government should continue and expand the scheme despite economic challenges posed by the pandemic. Labour supports the order but urges the Government to lower the qualifying earnings threshold and reduce the age threshold for automatic enrolment as committed in 2017. There is concern about the implications of freezing the earnings trigger, which affects female workers and ethnic minority employees disproportionately.

The SNP calls on the UK Government to remove the £10,000 earning threshold for pensioners’ automatic enrolment due to concerns about lower-paid workers losing out on vital retirement savings. The earnings trigger exacerbates gender and ethnicity pensions gaps, with women disproportionately affected by low wages or part-time work, leading to later life poverty. The SNP offers solutions such as removing the lower limit so contributions are payable from the first pound earned, lowering the age threshold from 22 to 18, and expanding contribution rates beyond the statutory minimum.

The debate discusses the Government’s longer-term intentions on auto-enrolment, questioning why the earnings trigger is being frozen at £10,000. The speaker highlights that this change does not represent progress towards the 2017 review's ambition of implementing changes before the mid-2020s to include contributions for all employees aged 18 and over from the first £1 they earn. He also asks about further progress on increasing contributions beyond the statutory minimum, addressing gig economy workers' eligibility for auto-enrolment due to recent Supreme Court rulings, and enquires into extending auto-enrolment success to self-employed individuals.

The speaker acknowledges the success of automatic enrolment but expresses concern about the lack of progress on lowering age thresholds and abolishing lower earnings limits as per the 2017 review. She calls for an update from the Minister regarding these changes and raises concerns over gaps in coverage affecting young people and those with multiple low-paid jobs, especially women due to disproportionately falling below the earnings threshold. Chamberlain also questions how the Government will respond to the recent Supreme Court judgment on Uber workers' status and its implications for auto-enrolment.

Jim Shannon supports automatic enrolment for pensions, citing Library briefing data that shows a tenfold increase in membership of defined contribution occupational schemes from 2.1 million to 21 million between 2011 and 2019. He raises concerns about the financial impact on employers due to furloughing staff during the coronavirus pandemic and suggests retaining the lower earnings limit for now. Shannon believes that changes should not be implemented at this time, advocating for support for small employers.

Guy Opperman responds positively to the debate, highlighting the Pension Schemes Act 2021 and automatic enrolment reforms which have increased pension savings among young people from about 35% in 2012 to 86% currently. He commits to ongoing support for employers through measures such as the automatic enrolment review, pensions dashboard implementation, addressing pension scams under section 125 of the Pension Schemes Act, and integrating climate change considerations into pension policies.