There was a lot of noise yesterday about this announcement. This blog follows up on what happened in parliament and concludes that while the Bill is doomed to be lost in the wash-up, it serves a useful purpose. AE is back on the parliamentary agenda in time for the implementation of the 2017 reforms “by the middle of the decade”.
Richard Holden MP @RicHolden will this afternoon seek to introduce a Private Members Bill on extending #pensions automatic enrolment. https://t.co/0MP5fJ2KA5
— Josephine Cumbo (@JosephineCumbo) January 5, 2022
Here is the extract from Hansard recording the Bill which was read yesterday afternoon and which will be read for a second time on 25th February.
Which will then go to the back of the queue for a Friday in the Spring and die a quiet death at the end of the current session…!
— Steve Webb (@stevewebb1) January 5, 2022
Steve was near enough right in his prediction for the second reading. The Bill will probably get lost in the wash up and you might be wondering what the noise was about.
The noise focused on reducing the minimum age for automatic enrolment from 22 to 18, but the Bill also calls on the Government to scrap the lower qualifying earnings threshold.
That leave be given to bring in a Bill to extend pensions automatic enrolment to all jobholders aged at least 18; to remove the lower qualifying earnings threshold for automatic enrolment; and for connected purposes.
There may be a mistake here as the lower level of qualifying earnings relates to the bottom end of the band of earnings against which contributions are calculated. This is not the same as the earnings trigger which is the amount you have to earn to be auto-enrolled.
In yesterday’s speech, Richard Holden said
At the moment, people earning £9,000 for two jobs, maybe working 12, 16 or 18 hours a week in my constituency, do not get the real benefits of auto-enrolment at all
The big differences are also particularly stark because at the moment that woman earning £18,000 a year working two jobs does not get the benefit, but someone earning £180,000 does
The earnings trigger is not mentioned in what we can see of the Bill so it is hard to see how such people – who might earn £9,000 per job and not get enrolled, will find their situation improved.
The earnings trigger is reducing in real terms because it is stuck at £10,000 and earnings are increasing. Clearly the Bill is looking to help include more low earners but this needs to be done by reducing the trigger – the LEL is a separate matter.
Incidentally, the DWP has yet to finalize these levels and triggers for April 2022, something that is causing payroll “real world” problems. I wrote about this late last year.
But back to this Bill. Is there a confusion between earnings trigger and the qualifying earnings level? If there is , it is an easy enough mistake to make, but not one that should be made in presenting a parliamentary Bill.
There are elements of the 2017 AE review which are not covered in this Bill. There is nothing here for the self-employed and though Richard Holden’s speech nods to Guy Opperman (get well soon), this Bill doesn’t seem to be aligned to the DWP’s annual review or the earnings trigger and qualifying earnings band
It is sponsored by a number of “red wall” MPs and seems to have a political ambition of maintaining Conservative hegemony in the north east of England
This legislation would transform the lives of millions of working people—not in great jobs but in low-paid work—who are the backbone of our country. The Prime Minister said in the constituency of my hon. Friend the Member for Sedgefield that votes were lent to us at the last general election and we have to deliver for those people. I think the Bill is one of the clearest ways that we could do so, and I commend it to the House.
There are major consequences for making the changes proposed in the 2017 AE review. Including youngsters is operationally difficult with respect to the small pots initiative, Estimates from the hospitality industry, employs around 1 in 4 workers under 21 who have a 50% turnover rate.
The cost of removing the Lower Earnings Limit would be to more than double personal contributions for those earning under £12,000. Many of these people would have no benefit from tax relief till 2025 because of the net pay anomaly.
If the Earnings Trigger is to be included in the Bill, it will have major consequences for employers and for the national minimum and living wages.
And the self-employed don’t get a look in.
While I side with Steve Webb in considering this Bill’s chances of success, it is nonetheless good that these issues are getting an airing. Let’s hope that it pricks the spurs of the Minister’s intent. As I mentioned in my new year aspirations, 2022 is the year when we get the timetable for these mid-decade “extensions” in place and while this may be a false start, it should get the runners out on the track.