New research reveals that 82% of employer-sponsored stakeholder pension schemes remain ‘empty boxes’ with no pensions yet active. The Association of British Insurers (ABI) is calling for more action to help employers to promote pension take-up.

The ABI says that employer contribution to pensions is the main item that encourages people to join a scheme. A modest 5% employer contribution increases scheme take-up fivefold, yet only 13% of employer based schemes have employer contributions.

The survey, which is the third detailed ABI market analysis of the stakeholder pensions market, shows that.

• 1.5m stakeholder pensions have been sold since April 2001.
• 350,000 employers have designated a scheme – but 82% remain empty boxes with no members.
• Only 13% of employer-based schemes have employer contributions.

Commenting on these results, Mary Francis Director, General of the ABI said:

“Stakeholder pensions have so far fallen short of expectations. We must need more action now to ensure that people use them to start saving for a decent retirement."

“We know that active employer involvement in pensions works. That’s why we’re recommending a programme of employer action to boost pension take-up, to be taken forward in partnership by Government, employers, unions and the pensions industry.”

The ABI proposes a 5-point Employer Action Plan to be taken up by the Government’s new Employer Taskforce, headed by Peter Davis:

• A Government-led programme to encourage employers to promote the schemes they sponsor.
• Permitting employers to promote the schemes they sponsor, eg by exempting them from the Financial Promotions Order.
• Helping employers meet the costs of advice through a Workplace Advice Tax Credit.
• Giving practical help to employers via the Government’s proposed Employer Information Pack.
• Requiring employers to do more – eg requiring them to give each employee a leaflet about the scheme they sponsor.

Mary Francis continued, “Pensions are inextricably linked to the workplace. Our proposals will involve employers and help them help their workers.”