Stakeholder pensions ‘failing target groups’
Stakeholder pension schemes are failing to reach their target audience, a new study reports.
The low-cost pension schemes, backed by the Government, are intended to encourage low earners to save for retirement.
However, research by Datamonitor suggests that the schemes, launched in April 2001, are mostly being snapped up by existing pension holders and high earners, who are attracted by cheaper charges and greater tax advantages.
The study by the research firm shows that the take-up of stakeholder pensions is generating very little new business, but instead is ‘replacing’ other types of pension plans, such as group and personal pensions.
During 2002 sales of individual new stakeholder plans increased by 76.4 per cent and the number of work-based stakeholder schemes sold went up by 80.6 per cent, but the total pensions market still decreased in value.
Liz Hartley, the report’s author commented, ‘to a large extent, stakeholder pensions are cannibalising existing retirement provision.’
