Limited Appeal for Stakeholder Pensions

Latest research from Mintel forecasts poor take-up for stakeholder pensions which were launched by the Government to ensure lower-paid employees have the opportunity to build up a low-cost pension plan for themselves. "Marketing to the Unpensionables" finds that just 5% of UK adults are considering a stakeholder pension.

According to Paul Davies, Financial Consultant "Results are likely to come as a disappointment to both government and pension providers who were hoping that simplicity and flexibility of the product will bring the majority of employees into a private pension provision."

The Mintel research reveals that a third of adults aged 16 and over (equivalent to 13 million consumers of working age) are making no pension provision whatsoever.

Exclusive consumer research questioning 1,910 adults aged 16 and above highlights the young as a key group of consumers not making pension provision. Some 71% of those aged 25 and under admitted to having made no arrangements for a pension. "The issue for young people is that retirement seems such a long way off as to be irrelevant, and today's high-spending, low-saving culture encourages the trend to live for today and forget about the consequences" comments Paul Davies.

By contrast, those who cannot afford to save are slightly older, with fewer financial resources, lower incomes or have pressure on existing financial resources. Almost three quarters of those in the low income socio-economic group E are without a pension, along with some 67% of those not working and some 59% of benefit dependants.

In terms of gender, women are 40% more likely than men to have made no pension provision, as well as being twice as likely to be dependent on a spouse. Almost half of men stated that they would be able to afford a 5% pension contribution. This is approximately equal to the current average contribution into an occupational pension scheme by an employee, and more than the average contribution into a personal pension. Some 46% of women said it would be difficult to afford a 5% contribution, compared to 33% of men. Despite years of equal pay legislation, the average net income of a woman is still about £100 per week less than that of a man, whilst women's average disposable income is half that of men.

Over half of adults feel working people should be compelled to contribute to an occupational or private pension scheme, yet there are significant numbers who agree compulsory provision would be a struggle. One in three without a pension have not given it a thought.

Looking specifically at those with no pension provision, almost one in three adults stated they haven't really considered how they will fund their retirement. Almost 40% of this group claim that they would like to save for the future, but cannot afford to do so at present.

Many consumers perceive that they are living under financial constraint and, therefore, are unable to make regular contributions to a pension. In particular almost 40% of those aged 25 to 34 not making current provision claimed if they received an extra £50 per month they would take out a pension and make regular payments. Similarly, some 44% of consumers with no pension provision cited if they earned a regular wage or salary, they would make regular pension contributions.

All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

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