Few takers for pensions sold at post offices

A much-trumpeted initiative that saw the Post Office marketing stakeholder pensions throughout its branch network on behalf of Standard Life has spluttered to a halt, with just 2,000 sold in the past 15 months.

The figures show the life assurer sold an average of one pension for every nine branches of the Post Office’s 18,000-strong network.

Most sales took place in the weeks immediately after the launch of stakeholder pensions in April last year. It is understood that new sales throughout the entire UK post office network are now running at barely a dozen or so each week.

The poor take-up casts further doubt on the government’s strategy of using stakeholder pensions as a retirement savings tool for low earners, as well as shifting the pensions burden from the public to the private sector. Earlier this year it was revealed that life assurers were telling customers to switch back into the state pension system because the opt-out rebates they receive were too low.

When Standard Life first announced that it was teaming up with the Post Office, owned by Royal Mail, to launch stakeholder pensions, it described the deal as “a prestigious business win”.

Standard Life is believed to have spent up to £1m to develop systems allowing it to access money paid over the counter by policyholders and credit it to their accounts. It has also paid for the marketing literature in all Post Office branches.

Simon Douglas, managing director of Standard Life’s marketing operation, yesterday admitted: “We are disappointed at the take-up. We feel that without greater activity by the government to promote stakeholder pensions it will be hard to distribute them effectively.”

He also warned that the decision to cap charges on stakeholder pensions to just 1 per cent made it difficult to market them. “All the evidence suggests that these products are not bought but sold. The cost of the advice has to come from somewhere.” However, Mr Douglas added that neither Standard Life nor the Post Office had plans to pull out of marketing stakeholder pensions.

Recent reviews of the way financial products are sold by the Financial Services Authority, the City regulator, and Ron Sandler, former Lloyd’s chief executive, should lead to a more liberal sales regime.

This could allow post office counter staff to hand literature to customers, instead of expecting them to pick up leaflets themselves. At present, this might lead to them being classed as “introducers”, incurring additional regulatory costs.

Kevin McAdam, head of commercial markets at the Post Office, said: “We would also take the view that sales have been disappointing to date and much less than we would have hoped for. As a government [agency], we would have liked to do more to help encourage greater pension provision. We are still very positive and determined to make it work, but we are concerned that there is not a lot of ‘noise’ promoting stakeholder pensions.”