Research by consultancy Brahm shows that 52 per cent of workers paying into a pension have never knowingly increased their contributions and the figure rises to 60 per cent among the self-employed.
The effect of charges being taken from the the pension pot rather than contributions, even at 1 per cent, means that individuals need to increase their contributions regularly.
This is particularly relevant for stakeholder savers, whose average monthly contribution is just £40, according to Government figures.
The research also shows that 65 per cent of workers believe that the pension credit penalises people who save for their retirement.
Independent pension consultant Dr Ros Altmann says there is a growing awareness among consumers that the pension credit can be a deterrent to saving and she anticipates that over 75 per cent of pensioners will be subject to means’ testing by 2040.
Altmann says: “For someone who received only basic-rate tax relief, the risk of being penalised by 40 per cent on retirement is a major barrier to pension contributions.”
B&CE deputy chief executive John Jory says: “We need to remove the obstacles such as the pension credit and introduce a form of compulsion and we would be very happy with auto-enrolment.”
A Midlands IFA claims to have lost business due to problems with sourcing system Mortgage Brain.
MMR Financial Planning IFA Alan Barrett says he has had difficulties in sourcing data from Mortgage Brain’s version six sourcing tool .
He says it is difficult to get through to Mortgage Brain’s technical department, with staff waiting over 30 minutes to try to speak to someone.
In a letter to Mortgage Brain, Barrett says: “It is clear that technical problems now exist with the system which make it unusable in its current format.”
He says: “Sourcers, not just Mortgage Brain, are like vultures on our backs who take our money but do not help us when we need it.”
Mortgage Brain said it would not comment on specific cases. Chief executive Mark Lofthouse says: “Since M-Day, we have seen a substantial interest in using the compliant version six of our system.”