Workers shun stakeholder pension schemes

The Government’s stakeholder pension scheme has, according to a recent report from the Prudential, failed to attract many of the workers it set out to target.

The Prudential commissioned survey also indicated that many workers had not been notified by their employers about the scheme in their place of work. With Monday October 8 the deadline for the scheme some employers who have not set up a scheme or another recognised alternative pension plan, may be facing fines of up to £50,000.

However, the Association of British Insurers (ABI) reported a last minute rush to sign up for the scheme, as the introduction of the stakeholder pension had created a wider “stakeholder effect” in the pensions market.

The ABI “Stakeholder Pensions – The Story So Far” included case studies revealing how the scheme has benefited employees and reported that sales of individual pensions rose by 50 per cent in the three months after stakeholder plans were introduced.

The report also claimed that many of these new sales were Group Personal Pensions (GPPs), generally written on the same terms as stakeholder pensions. Employers had also widened the eligibility criteria for their GPP and occupational pensions as a direct result of the introduction of the new scheme.

ABI Deputy Director General, Stephen Sklaroff, said: “The introduction of the stakeholder pension, together with the wider “stakeholder effect” is good news. As a nation we need to save more towards retirement.”

Recent research for the ABI estimated that the “savings gap” now totals £27 billion a year with some people saving nothing at all towards a pension.

Mr Sklaroff added: “Stakeholder makes a good start in encouraging people to save. But more must be done. We believe financial advice is the key, and, if regulation can be made less costly and cumbersome, that advice will become more widely available – especially for those on lower incomes.”

The report also included the latest sales figures for stakeholder pensions. During August, 64,000 new pensions were set up, with 25,000 more employers signing up as providers. (SP)