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Pensions Bill [Lords] (Programme) (No. 2)

I should like to discuss auto-enrolment in general, and new clause 1 in particular. The new clause has been tabled in my name and those of my colleagues on the Work and Pensions Select Committee and several other hon. Friends. This part of the Bill enjoys much greater cross-party consensus than the matters that we were discussing earlier. Auto-enrolment will improve the pensions landscape in this country for ever. For the first time, millions of ordinary workers will be brought into personal pensions. Between 3 million and 4 million women will begin pension savings, and a total of 10 million pension savers could be created by the massive nudge that they will get from this part of the Bill. For a typical worker on an average income, the expectation is that, from the age of 22 until their retirement at, say, 67, there is much more likely to be a persistency of saving. For example, a woman earning £25,000 who is saving 5% of her income would save £100 a month. Her employer would make up a similar amount and, with tax breaks over her working lifetime and reasonable investment growth, that regular savings habit could create a pot worth some £200,000 in today's money. Pessimists have said that that would provide an income of only about 45% of that person's earnings in retirement, but I say that that is 45% more than they would have had without this enormous nudge. I welcome this step, which I believe will, in the fullness of time, reduce the number of my constituents who as pensioners really worry about making ends meet. Albert Einstein described compound interest as the eighth wonder of the world, but sadly too many Britons have learned only about the negative effects of compound interest on their credit cards. However, with auto-enrolment in pension savings, many more will learn of the plus side for their personal balance-sheets. New clause 1 was tabled because many of us are concerned about the point at which individuals retire and convert their pot of money into their retirement income. According to the Minister earlier, about 60% of people with such a retirement pot do not move to another provider at the time they take their retirement income. Just as auto-enrolment is designed to nudge a person out of inertia about their pensions savings, so new clause 1 would give a person a great big nudge to prevent them from failing to shop around for a better retirement income.