Stakeholder pensions will be misbought because low commission levels mean
that advice is priced out of the market, according to Shadow Chancellor
In his opening address at PIMS, the former chief secretary to the Treasury
told delegates that without advice, consumers will not understand the
products they buy. He warned that people could end up with “completely
worthless” pensions which may not bring them above the minimum income
Portillo said the 1 per cent charge cap mean that it is not commercially
viable for advisers to sell stakeholder.
He also suggested to Money Marketing that the Conservatives might consider
looking again at the 1 per cent cap if they win this week's election.
He said his party is not prepared to make stakeholder contributions
compulsory for employers, des-cribing this as a blunt instrument that could
halt the growth of businesses.
He described the current state system as the “biggest pension rip-off” in
history, where people pay National Insurance contributions for up to 40
years to get a pension of around £72 a week. The Tories are proposing
a system where younger people allocate NI contributions to a private funded
Portillo said: “Stakeholder may have parts that will succeed but it is not
the whole answer. Commission levels are very tight. These are serious
issues and serious concerns that I know practitioners are worried about.”