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Private Sector Pensions (Automatic Enrolment)

Volume 597: debated on Monday 22 June 2015

1. What assessment he has made of the effects of automatic enrolment on private sector pension saving. (900440)

More than 5.2 million workers have been automatically enrolled in a workplace pension by their employer to date. Since the start of automatic enrolment, workplace pension membership in the private sector has risen from 32% in 2012 to 49% in 2014, a very positive start.

With 135,000 firms set to auto-enrol their employees from January, does my hon. Friend agree that the work of non-governmental groups such as the Solihull-based Chartered Institute of Payroll Professionals is key to the successful delivery of auto-enrolment and to meeting the savings challenge of 11 million Britons who are currently failing to put enough away for their retirement?

Our success to date in implementing automatic enrolment could not have been achieved without the significant ongoing support of a number of sectors, including the pensions and payroll industries. Friends of automatic enrolment have played a crucial role in bringing together organisations that are playing a key role in its delivery. Together they have helped the Government improve the process of automatic enrolment and ensure that these reforms work. We thank them for their support so far and their commitment to continuing to work with us as we start the process of helping 1.3 million smaller employers implement automatic enrolment for their workers.

But will the Minister advise the House of his estimate of the number of workers who are excluded from the benefit of auto-enrolment because of the changes in the threshold over the past five years, and of what proportion of those workers are women?

The Secretary of State is required by law to review the automatic enrolment thresholds in each tax year and may take into account a range of prescribed factors. The review can include considering whether to lower or increase the thresholds or leave them unchanged, as was the case for the current tax year. Freezing the trigger for this tax year will result in approximately 14,000 additional women and 20,000 people overall being brought into pension savings. On the hon. Gentleman’s specific point, I am happy to write to him with further information.

18. I welcome the Minister to his post.One way of boosting auto-enrolment further would be to ensure that people were more confident when they came to access their savings that they had the full range of choices that the law now allows. What more can the Minister do to encourage pension funds to offer that full range at an affordable and fair price? (900457)

I am encouraged by the fact that 91% of people who have already been auto-enrolled have continued to save, which is a welcome step and above initial expectations. We will continue to work with the Treasury, the Financial Conduct Authority and the Pensions Regulator to ensure that flexibilities, information and charges are all delivering for the consumer.

When it comes to the reforms that the Government are putting through, particularly on pension freedoms, we are mindful of the attractions of consumer choice but also of all the mis-selling scandals of the past. What assurances can the Minister give that all defined-contribution plan holders will get appropriate advice and that consumers will be adequately protected? It is not clear to us that the appropriate measures are in place.

As I said in response to the previous question, we will work with the Treasury, the FCA and the Pensions Regulator to monitor that closely. We have also brought in a 0.75% cap on charges, which in time will allow an extra £200 million to remain in pension savings.