Up to a third of the Government's stakeholder target group may be too heavily in debt to realistically afford a pension, according to figures from the DSS.
Pensions minister Jeff Rooker has released figures from the British Household Panel Survey in response to a Parliamentary question from Lib Dem social security spokesman Steve Webb.
The figures confirm the pension's industry fears about the lack of scope for advice in the product, reinforced by their own focus group research showing stakeholder pensions may be unsuitable for low earners.
The figures, from 1996, cover those without a pension earning £9,000 to £21,500 in today's money allowing for inflation. It shows over a third of this target group have more than £500 of non-mortgage debt. Nearly a quarter of these have more than £1,500 and ten per cent have debts more than £4,000.
Webb says: “Roughly a quarter of them owe more than month's salary so clearly they need to think long and hard about putting money into a pension when they are paying high interest rates and charges.”
Axa Sun Life marketing manager Steve Muir says: “There is a danger that people may spend an inappropriate amount on a product that they can't afford long term.”