A host of UK banks, life insurance firms and retailers are preparing to sell controversial new stakeholder pensions.

Small firms will be exempted initially from offering the pensions to staff.

But life groups and retail giants such as Tesco are believed to be planning to move into the market.

Low-cost stakeholder pensions are being introduced by the government next year, to encourage people earning between £9,000 and £18,000 a year to save for their retirement.

At present, many people in this group cannot afford private pensions and the state pension is unlikely to be able to support them by the time they finish work.

Struggling high street giant Marks & Spencer is even believed to be planning to join those firms offering stakeholder pensions, as is Direct Line.

Charge row

But the pensions industry have protested at the planned maximum 1% annual charge.

They say the figure is too low to cover the cost of providing adequate pensions.

Ministers say the 1% charge will be enough to cover basic advice, but not individual advice.

More than four million people working for larger firms will be able to purchase stakeholder pensions directly from their companies.

But those working for smaller firms - about 750,000 people - will be able to buy stakeholder pensions directly from providers.

Those preparing to sell the pensions include Norwich Union Long Term Savings, Legal & General, CGU and Friends Provident.

Small business generally welcomed the news that companies with fewer than 5 employees would be exempt from having to offer the new pensions.

Larger companies only have to offer the stakeholder schemes if they do not already offer an occupational pension.