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Pensions Bill

My Lords, I welcome the amendments that the Minister has put forward but perhaps I may add my voice to those urging him to go a bit further along the lines of the amendments tabled by my noble friend Lady Noakes. In this case, it is a matter of the prize of simplicity being more important than the prize of precision. If my arithmetic is right, someone whose basic earnings were at least 75 per cent of their total earnings would be better off getting 8 per cent of basic earnings rather than 8 per cent of earnings above £5,000 until their total earnings were well in excess of £20,000. Obviously, the higher their ratio of basic earnings, the higher that number goes. Therefore, it would be possible to have a simple test of the sort that my noble friend may have been imagining. So long as an employer ensured that bonuses and other one-off payments did not account for more than 25 per cent of the total wage bill across all employees—that is, an aggregate measure—he would be allowed to use the very simple test of paying people a percentage of basic pay, as is the case now. I know that would mean that there may be some individuals for whom that might not apply, but this is a matter of the benefits of simplicity outweighing the risks of having one or two individuals caught out. Most employers would not choose to run a system which deliberately disadvantaged employees in that way. For the sake of precision, the risk is that rather than allowing a simple rule, the Government lose the bigger prize of having a high take-up of the national pension scheme, while encouraging those employers who have generous schemes to maintain them. If we drive many employers to take the simplest route, the Government will lose much more than they will gain by trying to make these laws too precise. I suggest one example—I am sure there are many others: you could have a rule when certifying the schemes that the higher the aggregate percentage of commission and bonuses, the higher the ratio of basic pay that has to be paid to take account of that. I urge the Government to be flexible and to consider whether there is a simpler way of addressing this which would address the concerns raised.