The government may be keen to point out that the million-policy mark has been passed by stakeholder,...
The government may be keen to point out that the million-policy mark has been passed by stakeholder, but figures in a new ABI report suggest that there are growing gaps between the headline figures and underlying fundamentals of the sector.
To start with, more than 90% of employer-designated schemes have no members, the ABI says.
This is because employers forced to set up schemes by law have done just that but nothing further to actively encourage employees into the schemes.
Just 9% of employers are making contributions to schemes on behalf of their employees, and the number of monthly take-ups is decreasing over time - to just 46,000 on average in the third quarter this year compared to 66,000 in the second quarter.
Of most concern are the figures showing that even where policyholders are paying in money regularly it is not enough to provide any weekly income of note once calculated into retirement income.
The average monthly sum being saved now stands at £130.
But for a man who starts saving at age 35 this would only result in a weekly retirement income of £90, or £81 for women.
"Whatever the reason, the fact remains that without urgent action stakeholder pensions will fail to fulfil their potential and will not make an impact in closing the savings gap," the ABI report says.
The figures get far worse the older the policyholder is when he or she starts saving, and the ABI says stakeholder is only really going to work for people who start saving well before their 25th birthday.
And even worse, the industry does not even know its customers, because the rules governing stakeholder do not require the capture of specific earnings information, meaning that the ABI does not know the earnings of 82% of policyholders.
Without knowing who is buying stakeholder products, it is impossible to tell whether they are properly targeting those lower income earners that the government wants to save more.
Also of concern is the rising popularity of single premiums being paid rather than ongoing regular payments, although there is some positive news in the fact that the average monthly contribution has risen from £81 in the second quarter last year to the current £130 level.
To reverse the situation, the ABI suggests a five-point action plan to reverse the problems.
It suggests reducing the cost of regulation, simplifying the pensions system, providing wider access to advice, boosting incentives to save and spreading more personal finance education.
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