Pensions Auto-enrolment: Lower Earners

8. What assessment she has made of the adequacy of levels of pension contributions for auto-enrolled pensions for lower earners.

Due to the introduction of auto-enrolment, which is at least one policy that has cross-party support—it was legislated for by the last Labour Government and was taken forward by the coalition Government—there has been a 92% increase in the number of employees saving into a workplace pension scheme since 2012, which is over 10 million people saving for a pension who were not saving previously.

The Minister will be aware that around 10% of people automatically enrolled into workplace pension schemes choose to opt out, often due to low pay and cost of living pressures, leaving them losing out not only on building up their contributions, but on the top-ups of their employers. Would the Minister consider a simple tweak and allow employer contributions, which would have been due in any event, to continue in such opt-out circumstances?

I thank my hon. Friend for that question, which is indeed an interesting idea. It is one that was put forward recently by the Institute for Fiscal Studies, and I will consider it. In the pension schemes Bill, which we will introduce next year, low earners with multiple small pots will have those pots consolidated, so that the money works better for them and gives them a better retirement in the future.

I thank the Minister very much for her answers. Both parties—the one now in opposition, and the one in government—have always encouraged people to buy pension contributions in every way they can. However, the fact is that for many people who are low earners, it is not possible to have a pension scheme and at the same time to live, given the age we are in and the cost of living. What can the Minister do to encourage people to do so in a way that does not impact on the money they have coming in?

I thank the hon. Member for that question. A number of ideas have been put forward by think-tanks and research institutes. One such idea is a sidecar savings account, which could be used for a pension, but could also have some money set aside for a rainy day should somebody fall into debt. We are considering that. He raises a very important question, because some of those on low incomes sometimes cannot afford to put in those contributions, but there may be a way between opting out and remaining in the scheme, and we are looking at that.