Stakeholder pensions see miserable gains

by Gill Montia

Story link: Stakeholder pensions see miserable gains

Investors in stakeholder pensions have seen growth of just 10% since their launch in April 2001.

According to MetLife, someone investing £100 a month gross since launch (total contributions of £13,300) had a fund worth £14,600 after charges at the end of March 2012, with the fund value likely to have fallen again since.

The scheme, launched to encourage long-term saving for retirement among the less well-off, has attracted contributions of £28.3 billion so far with around 1.59 million people currently members of schemes, HMRC figures show.

But the number of scheme members has fallen 15% from a peak of 1.88 million in the 2007/08 tax year.

The fall might be partly explained by the effects of volatility on investments as analysis shows that in four out of 11 years, the value of the funds has fallen with drops of 31.1% in 2008/09 and 2002/03, and a 13% fall in August to September 2008.

The biggest annual increase was 2009/10 when funds rose 44.7%, while the biggest monthly rise was March to April 2003 when funds gained 8.7%.

The figures come ahead of the launch of auto-enrolment in October, with MetLife arguing that guarantees on capital and income could have a key role to play in encouraging retirement saving, as well as potentially producing stronger returns.