Supermarkets have been rapidly expanding into the personal finance sector over the last year, but Tesco is the first supermarket to launch its own pension plan, although a similar service is offered by Marks & Spencer.

The pension plan is a joint venture between Tesco and Scottish Widows - and is being marketed as a "cheap" but flexible plan.

Targeting shoppers

David Graham incoming chief executive at Tesco Personal Finance Life, said the plan was designed to appeal to shoppers who were "unfamiliar and uncomfortable buying financial products".

A jar of coffee and a personal pension please

The pension will initially be marketed in 20 stores before being launched nationally in the autumn.

From £30 a month, consumers can chose between five different pension funds - all low-cost tracker funds, typically charging only 1% for annual management fees.

There are no hidden charges, so policyholders can take payment breaks without being penalised.

Tesco is also offering a freephone number so consumers can talk to a financial adviser about pension planning.

Marks & Spencer offers an execution-only service for pensions. This means consumers have to decide themselves which fund to join - they will not be offered advice.

As with other financial products offered by Tesco, shoppers receive bonus points on their clubcard as an incentive to join.