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Actuaries reveal stakeholders are just empty shells

Research from the Association of Consulting Actuaries shows that 81 per cent of new stakeholder schemes are empty shells.

It says take-up among the Government&#39s target market of employers which did not offer pension schemes is disappointing. The ACA says four-fifths of new schemes have seen less than 5 per cent employee take-up and 46 per cent have no members at all.

The survey shows that no company employing over 1,000 people saw more than 5 per cent employee take-up after being forced to set up a stakeholder scheme by last October.

The study shows 55 per cent of final-salary schemes are now either closed to new entrants or future accruals.

Employers still paying into final salary schemes have had to increase contributions to 13.1 per cent of salary from 11.5 per cent in 2001 to maintain fund levels.

The ACA is calling for simpler state provision through a single flat-rate state pension paid for by increasing the retirement age, and abolition of contracting out.

But Scottish Equitable pensions development director Stewart Ritchie is accusing ACA of recommending policy changes not backed up by its research.

Ritchie says: “People are jumping on a rollercoaster of ill thought out ideas, making heroic assumptions and tremendous leaps of faith about what individuals and employers will do. But there is no hard research that justifies these conclusions.”

ACA spokesman David Robertson says: “Stakeholder take-up has been very low – you cannot say it has been a success. Our pension strategy maps out how we think the state scheme can interact with employer schemes.”

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