British Post Office Prepares to Offer Stakeholder Pensions
Jan. 28–The Post Office is to offer cut-price stakeholder pensions at
its 18,000 branches from April. The dramatic initiative, due to be
announced
on February 6, is a coup for the Post Office, still buoyant after a deal
with
banks to sell no-frills accounts.
The Post Office has been desperate to find money-making opportunities
since being told that it will lose UKpound 400 million a year from 2003,
when
the social security system is fully computerised and benefits are paid
direct
into bank accounts, rather than over the counter.
Without bringing in new money, experts feared the loss of up to 7,000
loss-making rural branches.
The Post Office, being renamed Consignia, is teaming up with a big
insurance company to sell low-cost pensions, but is tight-lipped about who
that will be. On Friday, it would rule out only Legal & General,
Prudential
and CGNU. Companies tipped as potential partners are Royal & SunAlliance,
Co-op Insurance and Friends Provident.
Stakeholder pensions will be available from April 6, with providers
allowed to charge a maximum of only one per cent a year. Customers signing
up
to a Post Office plan will be able to open and put money into them at any
branch. It is also expected that planholders will be able to obtain a
progress
report on a pension at a local branch.
Basil Larkins, managing director of Post Office Network Banking, said:
“We believe the people who should be taking out stakeholder pensions are a
core part of our customer base. Stakeholder pensions will be a major
success
at the Post Office.”
It is thought that people who take out stakeholders through the Post
Office will be able to use “smart” cards to make contributions.
Post Office executives have asked the Government to consider offering
a
one-off incentive to benefits claimants to encourage a rapid take-up of
universal bank accounts.
Only 37 per cent of those receiving benefit, including pensions and
child
benefits, receive payments electronically. The Government wants this
figure to
top 90 per cent, reducing the costs of fraud and payment delivery.
The Department of Social Security said it was not considered necessary
to
offer incentives to claimants to open universal bank accounts at Post
Office
branches, but it admitted that nothing had been ruled out.
The Post Office has also proposed that sub-post office staff receive
payments when they help claimants fill out paperwork to open bank
accounts.
