UK - To coincide with the first anniversary of stakeholder pensions, the Association of British Insurers (ABI) has published ‘One year on - stakeholders revealed', a report providing the first detailed analysis of the stakeholder market.
Over the last year there has been much debate about which sectors of society are benefiting from this new, low cost, flexible pension and whether or not it has hit the target market. This report aims to inform that debate and also looks forward, identifying ways of encouraging more people to save for retirement.
The report’s main findings show that:
* A total of 320,000 employers are now making stakeholder pensions available to their employees, out of a target number of approximately 350,000 employers.
* More than 750,000 people have bought a stakeholder pension.
* The vast majority of the stakeholder pensions - 97% - have been bought by or for people of working age. Two percent were bought for children, and 1% by those aged 65 or older.
* 69% of stakeholder pensions have been bought by men, 31% by women.
* Just over half stakeholder pensions have been bought through the work place.
* Nine out of 10 policies have been bought with the intention of making contributions at regular intervals. The average monthly contribution was £81.10.
* Limited information is available on earnings, and it may not be fully representative. However, where earnings of purchasers are known, the majority are between £10,000 and £30,000 per year.
* Where stakeholder pensions have been arranged through an employer, 70% of policyholders earn between £10,000 and £30,000 a year.
* Where stakeholder pensions have been bought individually, 43% of policyholders earn between £10,000 and £30,000 a year.
Mary Francis, director general of the ABI, said: Stakeholder pensions have appealed to a wide range of people, including many in the Government’s target income range. But current levels of take-up do not make a significant enough dent in Britain’s £27bn annual savings gap.
The move away from final salary schemes will widen the savings gap by up to £5bn each year. To help close the gap we need a new partnership between the Government, pensions providers, employers and individual savers”.
The ABI report goes on to recommend a number of reforms to boost saving for retirement:
* Getting employers more involved in helping people to save - for instance, inviting financial advisers into factories and offices, and encouraging more employers to contribute to employees’ pensions;
* Reforming the current pensions framework so that it is simpler to administer and easier to understand. It is vital that more people have a better understanding of what they can expect from the state in retirement;
* Further incentives to encourage greater pensions saving and, if necessary, consideration of greater compulsion;
* Cutting the red tape that surrounds pensions to ensure that more people can get simple advice for simple products.
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