Financial experts have warned that the government's plans for the low-cost stakeholder pension have failed, according to a report in The Times newspaper.
Legal & General told the paper it would not sell individual stakeholder pensions to those low incomes due to the limit set on charges for these products.
Adrian Boulding, pensions strategy director at the company, said this was because it was "unable to deliver good value for money on pensions with charge caps" to low-income earners.
"The low income area is a no-go area for us," he said. Legal & General does offer stakeholder pensions for individuals, but does not market them.
To ensure the savings systems remained inexpensive, the government initially capped charges for providers to just one per cent and has since raised this to 1.5 per cent.
Colin Taylor of the independent Key Retirement Solutions noted that "stakeholders haven't taken off because the government misjudged the need for advice and how much it cost to deliver it".
The experts agreed with the recent Turner Report from the Pensions Commission which pointed out that most stakeholder schemes were unprofitable for providers, while even minimal charges were unacceptable for those on truly low incomes.
Over 300,000 stakeholder pensions schemes have no investors whatsoever.
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