UK - Union leaders have called on the government to introduce compulsion on the back of new research into stakeholder schemes.
A report by the Trades Union Congress shows that less than 3% of workers have taken up a stakeholder pension. And the small number of workers who have taken up plans are not saving anywhere near enough to secure a good pension.
Experts say people need to save 15% of their salary throughout their working life if they are to retire with a reasonable pension at a reasonable age. This means that an employee on the average wage of £25,000 a year needs to put aside £3750 a year.
Yet the average contribution to a stakeholder pension from both employee and employer in employer-sponsored stakeholder pensions is just over £1000.
General secretary Brendan Barber said: “There is nothing wrong with stakeholder pensions in theory. But these figures show they are failing to take up the slack caused by employer retreat from occupational pensions linked to pay.
“We are building up a big pensions crisis for the future as fewer people in the workforce have proper pension arrangements. Yet when employers contribute, the evidence shows that staff do too. That is why we need pensions compulsion.”
But National Association of Pension Funds chairman Terry Faulkner insisted that compulsion was not the answer.
“We believe the voluntary system has worked in the past and don’t see why it cannot work in the future. The way to get people to save more is to incentivise employers to improve their pension provision.”
Confederation of British Industry director-general Digby Jones agreed: “It should be seen as an employee benefit. If employers want to attract and retain skilled people, they need to offer good pensions.”
Savers are being warned by the Insolvency Service to guard their pension pots from investment scammers and negligent trustees as it winds up 24 companies.
Respondents say they should only be required in certain situations as the system is not broken.
Smart Pension has absorbed more than 6,500 members from the Corporate Pensions Trust (CPT) after its trustees decided not to apply for authorisation.
The Defined Contribution Investment Forum (DCIF) has reappointed Vivek Roy as chairman for 2019 following a vote at its annual general meeting last November.