Pension News Slowdown In Stakeholder Pensions Uptake Continues
23 May 2003
The slowdown in sales of stakeholder pensions is continuing, according to the Association of British Insurers (ABI).
Analysis by the organisation shows that in the first three months of this year sales were up 8 per cent on the final quarter of 2002, but down by 22 per cent on the same period last year.
137,739 new stakeholder pensions were sold between the 1st of January and the 31st March 2003, representing around £740m in premiums. Just under half (48 per cent) of this value was transferred from one pension to another and is therefore not new saving.
Discounting transfers, the average monthly premium on individual stakeholder pensions continued to rise, now standing at £140 a month.
Alan Woods, Head of Life and Pensions at the ABI said, ‘Stakeholder pensions are not getting to the people who need them most. About half of were transfers from other pension plans, the rest were sold to wealthier people contributing £140 a month on average.
‘The Government needs to reflect on the lessons from stakeholder as it designs the new breed of ‘Sandler’ stakeholder products.’
The stakeholder figures are released at the same time as the ABI publishes its latest new business statistics for the life and pensions industry, and only months after its report ‘Stakeholder – Closing the Savings Gap?’ identified that 90 per cent of all employer stakeholder schemes are ’empty boxes’ – have no members.
The ABI calculates that just 9 per cent of employers are making contributions to stakeholder pension schemes on behalf of their employees.
Mr Woods continued, ‘Most people buy pensions through face-to-face advice. The cost of this must be allowed for in the Government’s review of the stakeholder price cap. And the Government must create the right environment for saving – that means new incentives and removing the disincentives inherent in the state pensions system.’