Skip to main content

Pensions Saving

Volume 550: debated on Monday 10 September 2012

Around half of all employees—around 13.5 million people—are currently not saving in a workplace pension. That is why we are pressing ahead with the introduction of automatic enrolment, to transform our long-term savings culture and support people in taking responsibility for their retirement.

Can my hon. Friend confirm that our policy of auto-enrolment, which is due to start in October, will mean that between 6 million and 9 million more people will benefit in retirement?

My hon. Friend is exactly right, and that indicates the scale of the policy. I often say that everyone will know someone who has been auto-enrolled. We are talking about a huge transformation, which is supported, I believe, in all parts of the House. It will be a revolution in pensions saving, and I look forward to the formal commencement just next month.

The Minister will no doubt agree that a good grounding in financial literacy encourages individuals to make proper decisions about providing for their futures, including with pensions. What discussions has he had with colleagues in the Department for Education about putting financial education in the curriculum?

I agree with my hon. Friend that financial literacy and financial education are important. He will know that our colleagues in the Department for Education tend to take a light-touch approach to the curriculum, rather than wanting to be over-specific. However, there is a great deal that can be done in the existing curriculum. For example, compound interest is a pretty fundamental pensions topic and, in my view, ought to be in every maths lesson.

A substantial number of those who are in pension schemes are saving well below the level needed to enjoy a comfortable existence in retirement. What are the Government doing to campaign for the better uptake of better schemes and encourage people to save earlier in their lives?

The hon. Gentleman is quite right: around one in five of those who will be automatically enrolled are in their 20s, and if we can just get people starting earlier in pensions saving, that would be a good thing. Next week we are launching television advertising about automatic enrolment. The key is good quality workplace provision, automatic enrolment—which most people will stay in—and incentives from the Government. To give just one example, people on the universal credit will get additional help with their pension, because their pension contributions are allowed against their income for universal credit, so low-income households will get an extra boost if they save for a pension.

In all parts of the House there will be agreement about the importance of auto-enrolment. However, the hon. Member for Warrington South (David Mowat) has already raised the issue of high costs and charges. Does the Minister agree that in order to meet his coalition pledge to reinvigorate occupational pensions, there must be full disclosure of all pensions costs and charges to the saver, and that this is a prerequisite to ending rip-offs and reinvigorating occupational pensions in the United Kingdom?

I think we have common cause across the House in wanting to see good value for money and transparency in charges. That is why I welcome recent initiatives—not just by the National Association of Pension Funds, but by the Association of British Insurers—to try to find ways of presenting such information simply and consistently. So far, under automatic enrolment competition is driving charges down, but we have the powers to cap charges and we will use them if we need to.