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Pensions Bill

That proposal is being kept under discussion with Help the Aged, which, as the hon. Gentleman knows, has been very supportive of the Bill and is keen that it gets through the House as quickly as possible. Its proposal has significant cost implications, which must be borne in mind. Of those of working age, around three quarters say that they will need more than the state pension to live on, yet only around 40 per cent. of those who have not yet retired are saving in a private pension. We must get to the point at which saving becomes the norm and a savings culture is embedded in society in general and in the young in particular. Sixteen per cent. of 20 to 24-year-olds are saving for a pension, compared with about half of those aged over 35. Less than half of moderate to low earners with incomes from £5,000 to £35,000 are saving towards a pension, compared with three quarters of those earning more than £35,000. Automatic enrolment into a qualifying pension scheme introduces for the first time such a presumption to save. Evidence suggests that automatic enrolment is one of the most effective ways to combat people's tendency not to act when faced with difficult financial decisions. It also has the greatest impact among groups where participation rates are the lowest. The Bill will introduce a mandatory duty on employers automatically to enrol their workers into a qualifying pension scheme. Many employers are already making substantial contributions to pension schemes and supporting their employees in saving for retirement. To make the package of reforms successful, however, the Government need all employers to play their part. That is why all employers will be required to contribute to their workers' pensions a minimum of 3 per cent. on a band of earnings for defined-contribution schemes, as recommended by the Pensions Commission.