Stakeholder
pensions have failed to attract the low-income earners they were designed for,
according to Britain’s biggest insurer, CGNU.
Philip
Scott, executive director of CGNU, said the schemes launched last spring had
primarily attracted wealthy retired people looking for a sound investment.
They
were originally intended to provide low-cost pensions for people who would not
otherwise put money aside for retirement.
Scott
said: “Someone who was earning £250 a week last February – and was probably
still earning £250 a week last May – is tightly budgeted and probably spends
more than they earn.
“The
fact that a new investment opportunity has been launched doesn’t change that.
So has the scheme achieved the objective of encouraging below-average earners
to make provisions? The answer is no, not really.”
Scott
added that it was a “flawed idea” to think that a lower annual charge would
influence people’s decisions to save or not.
He
called on the government to make pensions laws more understandable and
user-friendly.
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Despite
his comments, which follow similar criticism from other major insurers, CGNU
has sold £282m of stakeholder pensions since last spring and taken a 20 per
cent slice of the market as a result.
