The Association of British Insurers (ABI) claims that credit would help turn around current government efforts to encourage low-income workers to save for retirement, the Edinburgh News reported. Pension p roviders say the current 1% administrative fee cap hasn’t given them much room to help provide workplace advice. As a result, man y small businesses, while following their legal obligation to sponsor pension plans, are not actively promoting them to their workforce, according to the report.
Scrapping the fee cap – which ABI said makes the pensions hard to promote, sell and administer – and giving employers a financial incentive in providing pension-related financial advice would be a step in the right direction.
The ABI’s suggested reforms comes with the group’s report that current government efforts to prompt more employee retirement saving have largely been a bust with 82% of the 350,000 pension plans launched in April 2001 still having non-existent membership rolls. They were, ABI claimed, mere “empty shells.”
Average monthly contributions of just £155 also
suggested that about three million people earning less
than £20,000 a year – the original target market – were
not buying the plans, the ABI said.
econd quarter stakeholder pensions sales were down
10% to 166,245 policies, compared to the same period last
year, and the ABI also said that 47% of all
payments into the plans were asset transfers – rather
than new investments.
However, the sales figures represent a slight improvement on the ABI’s November 2002 report, which showed 90% of plans were empty shells, with 9% of employers paying into the funds, compared with 13% in the latest poll.