The Government has launched a consultation into changes to the stakeholder pension, pensions minister Malcolm Wicks announced today.
Among the proposed changes will be the requirement for a customer’s savings to be moved to less volatile investments five years before retirement. Known as ‘lifestyling’, this change will help provide additional security for customers in the run-up to their retirement.
Stakeholder pensions are a low-cost option with annual charges of 1 per cent and were introduced in April 2001. To date more than two million have been sold.
Wicks said the Government was making these changes so that stakeholder pensions can become part of the new suite of stakeholder products that can be sold through a new basic advice process.
“The key change is that the savings of those people who do not want to make investment choices will be ‘lifestyled’,” he said. “‘Lifestyling’ means that at least five years before retirement, the members’ pension savings will start to be moved into less volatile investments to reduce the risk of a sudden drop in value shortly before retirement.
I am also announcing today that when the new stakeholder pension charge cap comes into effect in April 2005, the cap for existing members will be held at 1 per cent.”
The consultation period will run until 17 December 2004.
The consultation document is on the Department’s website at www.dwp.gov.uk/publications/dwp/2005/stakeholder_pens/sps_amd_regs.pdf