Sales of UK stakeholder pension have got off to a disappointing start. Data from the Association of British Insurers (ABI) suggests that only 570,000 policies have been sold in the first eight months. The UK government introduced the scheme last April in a bid to encourage low and middle-earners to save for old age.
Around 300,000 of the 350,000 employers required to offer stakeholders to their employees by last October have registered and are offering stakeholder pensions. Work and pensions secretary Alistair Darling was upbeat about the figures, saying they are extremely encouraging.
Dick Strattan, worldwide partner at William M Mercer, is surprised that one in seven employees have not acted. “I would have thought that the government would be disappointed that 50,000 employers have yet to sign up. It’s a lot of employers.”
But the figure of 570,000 policies looks paltry against the ABI’s estimate that 40% of the UK’s eligible workforce lack any form of private pension. Darling maintains it was always going to take time for individuals to warm to stakeholder but that the figures suggest the stakeholder effect is taking hold.
The ABI expects a steady increase in the number of policies sold now that the infrastructure is in place for employees to join. But the disappointing start raises the question of whether the government will need to make the scheme compulsory. “I’d anticipate that there will be an element of compulsion in the next 10 years,” says Strattan.