Stakeholder pensions will be misbought and lead to greater financial exclusion, forecasts the Swiss Re Insurance Report 2001.
The report found that the pension system is still so complicated, with the minimum income guarantee and pension credits, that stakeholder will never be simple and consumers will not understand what they are buying.
It says the finance industry must lobby the Government for a more simplified pension regime to enable it to “break out of the Catch 22 situation where advice is necessary but not feasible within product margins”.
The report finds that lowcharging pensions will remove advice because it is too costly but consumers want advice on pensions.
It also comes out against decision trees, saying they are ineffective in giving consumers the real advice they want and need.
It shows stakeholder awareness is still low, with 41 per cent of consumers saying they have never heard of the initiative.
The life industry also comes in for strong criticism for giving the Government mixed messages.
The report says signing up to stakeholder, despite the industry's objections, has belittled the industry's voice.
Technical manager Ron Wheatcroft, who is co-author of the report, says: “Far from achieving its intention of creating a market in which consumers are able to buy simple value for money products, many consumers are at risk of misbuying stakeholder and personal pensions.”