Stakeholder pensions 'a tax break for well-off'

Stakeholder pensions have failed to reach their target audience - the low-paid - and are instead being taken out by the children and partners of the well-off, the TUC said today.

The group said Inland Revenue figures showed that in the year to 5 April, 2002 an average of £950 was paid into the low-cost pension schemes.

But it said this masked the fact that employees were contributing an average of only £720 a year to the pensions.

At the same time stakeholders taken out by non-workers, many thought to be the children or spouses of well-off individuals, had 260per cent more paid into them with an average of £1,928.

The group said that in April 2002 there were about 840,000 stakeholders, about 680,000 of which were taken out by employed people. But the TUC said many of these were likely to be top-up pensions taken out by those already contributing to occupational schemes.

It said about 10,000 people who were already receiving a pension were contributing an average of £2,740 a year to a stakeholder, suggesting they had been taken out by relatively well-off younger pensioners who were keen to take advantage of the tax breaks they offered.