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Pensions Bill

It is probably the first time that I have been criticised for an amendment that might be correctly as opposed to incorrectly drafted, which seems to be my noble friend’s line. However, as my late husband used to say, what you need to know about people is whether they like their compliments forehand or backhand; I think that probably counts as backhand. I am grateful for the support all round the Committee and the thoughtful contributions from these Benches that I would expect. I also thank the noble Lord, Lord Skelmersdale, for his thoughtful contribution in trying to weigh up some of the options. He made a point about housekeepers, which went back to the point made by my noble friend about complexity. The amendment increases simplicity. The proposal would apply only if you had earnings that took you above the LEL. You could make voluntary contributions below it, and only that would trigger the employer contribution. If the housekeeper earned less than £5,000, the situation is as now. If the employee was earning £8,000, the employer would have to make pension arrangements that, currently, bring the £5,000 to £8,000 under personal accounts, and for the extra £150 per year, would do it on the first £5,000 as well. In that sense, it is very simple. Employer and employee pay a pension contribution in the same way that tax and national insurance are calculated. Pension contributions are calculated on earnings from £0, even though there may be exemption bands, as there are for taxation or national insurance purposes. There will be simplicity of alignment between what now happens in DC schemes and what happens in personal accounts. My noble friend rightly made the point that DC schemes have a different basis. They operate according to basic pay, rather than qualifying earnings. Some helpful statistics have come from Standard Life. I have not been able to verify them but have no reason to think that they are incorrect. Only 3 per cent of women’s earnings, and 8 per cent of men’s, are not basic. For most women, particularly, the gap between basic earnings, on which DC schemes are calculated, and qualifying earnings, on which personal accounts are calculated, is minimal, if there is a difference at all. This comes into to the debate on qualifying earnings, which we may have later. Qualifying earnings will obviously include the occasional hour or two of overtime in retail, but most women are not in the commission-heavy territory of, say, car salesmen, as some men are and where a bigger problem arises. I was heartened by my noble friend’s recognition that this is an issue where we could, with consent—I hope—take the industry forward with us. We are not dealing with big sums, but it could transform outcomes for lower-paid women. This will make a significant difference to the ability, as a result of personal accounts, to float women off the means-testing advice conundrum, which we are all rightly concerned about. I am cheered by my noble friend’s words. I am sorry that my drafting was correct. Next time I will make sure—intentionally, as well as unintentionally—that it is incorrect; that way we will have a level playing field. Under the circumstances, I beg leave to withdraw the amendment. Amendment, by leave, withdrawn. Clause 9 [Information to be given to jobholders]: