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Pensions Bill [HL]

My Lords, Amendment 23 would reduce the maximum length of the waiting period from three months to one month. Amendment 24 applies an exception so that existing employees have a three-month waiting period. However, based on previous discussions with the noble Lord, our interpretation is that Amendment 24 is intended to apply an exception so that new employees would remain eligible for a three-month waiting period. I know that we are in Committee and so one can refine the intention of an amendment to make it more precise, but that is our understanding of its intention. Clause 6 introduces the concept of an optional waiting period to the automatic enrolment process. Automatic enrolment has made numerous appearances in this place and another place. A recurring theme has been the extent of the duty placed on employers. I preface my remarks by putting this in context. We are talking about auto-enrolment for pensions—the biggest experiment in asymmetric paternalism that the world has ever seen, I think. We are trying to encourage people to save. We forget that the encouragement comes in the form of automatic enrolment. Let me say in response to both my noble friend Lord Boswell and the noble Baroness, Lady Hollis, that if we overcomplicate this, we will not have a smooth-running system. Auto-enrolment is a means to an end. That end is for the norm to be for people in the country to save more. The noble Baroness cited the median figure of 11 jobs over a lifetime. If that is the median, the noble Baroness is right: 33 months represents 7 per cent of the provision of a potential pension pot. However, if auto-enrolment has worked and people have started opting into pensions, by the time they are on their second, third or fourth job, they will opt in because it will have become a habit. One must look at what auto-enrolment is, rather than become overly mechanical about it, which these amendments are. The aim here is to ease the burdens on business. This simplification measure of pulling two systems into one—to get rid of postponement and to have one system of waiting periods—has been widely welcomed by employers. A waiting period will free employers from the administrative burden of enrolling casual staff who are working for them for only a few weeks and wish to maximise their take-home pay, rather than save for a pension. I am thinking of most of Sydney in Australia when I make that remark; I think that most people in Sydney come to work in London for two years.