Jonathan's Pensions (Extension of Automatic Enrolment) Bill has been adopted by the government - his third Private Member's Bill to make it into law.
For Jonathan, since becoming a father to Amelia and William, that’s meant an eye to the long-term and thinking about how to teach them about being responsible with their savings in the future.
This Bill being implemented in Parliament will extend the coverage of automatic enrolment to younger people and those in lower paid employment, with all eligible workers benefiting from increased pension contributions from their employer.
Jonathan said: “The expansion of the auto-enrolment will mean that everybody has their own pension in addition to their state pension in retirement and has comfort in old age. Research from Onward shows that the Bill will have a positive impact in areas such as Stoke-on-Trent North, Kidsgrove and Talke.
“Around 25% of employees in my area are not auto-enrolled in a pension scheme. The Bill tackles that, creating more stability in the long term. People who earn £9,000 from two separate jobs, and who work twelve to eighteen hours a week, perhaps juggling their jobs around childcare or caring responsibilities, do not currently get the benefits of auto-enrolment at all.
For part-time workers this auto-enrolment rate stands at 60%. That compares with a rate of almost 90% among workers in full-time jobs. According to Onward, the Bill will result in roughly an extra third pf the part-time workforce being auto-enrolled, which is an increase of 50%. Research by Onward suggests that the change will add almost £3.5 billion to the total life savings of people in our area. That will transform the life of everyone in Stoke-on-Trent, Kidsgrove, Talke, and the whole country.”
Helping people save for later life should remain one of the Government’s key priorities. As many people may struggle to be able to put money aside for their future certainly with the cost of living on the rise. Therefore, setting people up from a younger age for the later lives will be hugely beneficial.
Automatic enrolment was introduced under George Osborne when he was Chancellor. The automatic enrolment succeeded in transforming pension savings with over 10.8 million employees being automatically enrolled into a workplace pension for the first time, leveraging private sector investment. Compared to 2012, around £33 billion has been saved in real terms, setting more people for more secure futures.
However, we need to go further so this can benefit everyone and keep pushing for those who do not currently get auto-enrolled or do not reap the benefits of it. For example, part-time workers auto-enrolment stands at 60% below, compared with almost 90% of workers in full-time jobs. The Bill will see roughly an extra third of the part-time workforce auto-enrolled, which is an increase of 50 percent on present numbers.
That means many people specifically those who are disadvantaged would be brought into lifetime savings for their futures. This Bill will make a difference, helping people to help themselves and giving them more reassurance of stability to enjoy their later years of life.
As mentioned in Jonathan’s speech, according to Onward in Stoke-on-Trent North, Kidsgrove and Talke around 25% of people do not have a workplace pension. By bringing the eligibility age down to 18, this will help to instore that saving mindset into the younger generation and helping them with the opportunity of preparing better for retirement.
Research from the Association of British Insurers indicates that these changes will aim to reduce the gender pensions gap. The average pension pot for a woman aged 65 is one fifth of that of a 65 year old man's. This Bill will transform retirement for women across the country, giving them more independence and stability in retirement. The Bill will give someone on the national living wage an extra £100,000 over their lifetime – representing an increase of 60 percent on today. These small savings that good hard-working people make over time will make real differences to people’s futures. This evidence shows the huge positive impact it is a no-brainer that we now need to extend auto-enrolment to those aged 18 and above.
This is a serious piece of legislation that could make a serious change. It is about bringing people security in their old age, at minimal cost to them when they are younger.