Stakeholder, the government's brain child, has succeeded in meeting its "target group", says the Dep...
Stakeholder, the government's brain child, has succeeded in meeting its "target group", says the Department for Work and Pensions, as two-thirds of people taking up stakeholder pensions are low-income earners.
Statistics published today by the Inland Revenue for tax year 2001/2002 reveal that 63% of total sales went to those earning less than £20,000 a year.
In addition, almost one in three buying a stakeholder pension did not have access to a company pension scheme.
The figures show that the majority of buyers were under the age of 45, with 30% being bought by women.
Pensions minister Malcolm Wicks says these figures show that stakeholder pensions have made an "encouraging start" when it comes to offering people a new alternative to save for their retirement.
"Key groups such as workers who may not have access to pension provision through their employers or women who have previously struggled to find a product that fits with their work and lifestyle patterns have been utilising the opportunity stakeholder pensions present," he says.
However, these figures are contradicted by research findings released two weeks ago by the Association of British Insurers, which branded stakeholder pensions a failure.
The ABI says that of the 1.5m stakeholder pensions sold since they were first introduced in April 2001, almost half have so far been transfers from other pensions, and have thus not helped to bridge the UK's £27bn pension gap.
More worryingly, though, is the finding that 82% of employer-sponsored stakeholder pension schemes remain "empty boxes" with no members.
Blaming the 1% price cap on charges for the poor take-up, the ABI says that "the result is that the core market for stakeholder pensions is being left behind".
Furthermore, the ABI says sales of stakeholder pensions are decreasing, with 10% fewer sold between April to June this year compared to the same period in 2002.
ABI director general Mary Francis says: "Stakeholder pensions have so far fallen short of expectations. We need more action now to ensure that people use them to start saving for a decent retirement."
Pension savers need to engage with their retirement options far earlier than is currently normal to ensure they save enough through their lifetime, according to a report from the Association of British Insurers (ABI).
The majority of financial advisers (85%) believe the number of self-invested personal pension (SIPP) providers will continue to fall in the coming year, according to Dentons Pension Management research.
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