Savers shun stakeholder pensions

The Stakeholder Pension launch in 2001

Three-quarters of company stakeholder pensions are "empty shells" with no active members, research shows.

The low-cost pensions with charges capped at 1%, were introduced in April 2001, to encourage saving.

Firms with five or more workers must offer a stakeholder pension if they do not have a pension scheme, but neither is obliged to contribute.

Stakeholders are now the most popular type of pension plan, with 35% of firms providing access to the plans.

A Department for Work and Pensions spokeswoman said: "The government always said it would take time to change people's savings habits.

"However, getting pension schemes established that can be accessed through the workplace was a very important first step."

Within a few hours of the official research being released, the Occupational Pensions Regulatory Authority (Opra) announced it had fined its first firm that has failed to set up a scheme.

Flowfood Limited, a food processing plant, with 300 employees was fined £10,000 for failing to comply with the legislation.

Since October 2001, employers with five employees or more have had to offer their staff access to a stakeholder pension scheme or alternative pension arrangements.

Opra said it had always had the power to fine employers for breaches of stakeholder legislation, its main focus has been to help employers comply with the law and views fining as a last resort.

Flowfood Ltd was not immediately available for comment.