Employees face inequality over stakeholder pension charges

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The Independent Online

Some employees, will have to pay substantially higher charges than others on stakeholder pensions, the low-cost retirement saving schemes for all workers.

Some employees, will have to pay substantially higher charges than others on stakeholder pensions, the low-cost retirement saving schemes for all workers.

Under deals being negotiated by UK pension providers with companies and trades unions, some people will pay 50- per cent more than others in charges for their stakeholder schemes. Legal & General, which already has tie-ups with seven unions and other "affinity" groups of employees, has offered a stakeholder scheme to the IT workers group, the Computer Services and Software Association, for a flat charge of 0.65 per cent a year.

In contrast, L&G will levy the maximum 1 per cent charge permitted for stakeholders on members of the Public Relations Consultants Association (PRCA) with a pension worth below £10,000. A spokesperson for L&G said yesterday: "We are currently negotiating other deals, which will depend on how big the company is and how many people are likely to take up the scheme. Some schemes will be about the 1 per cent mark." Prudential, which has a tie-up with the TUC, is also negotiating individual deals.

Alan Smith, managing director of group pensions, said the varying prices reflect how difficult it will be for pension providers to make profit from the stakeholder market when it is introduced next April.

Simon Barnes, from the Consumer's Association, said: "This is a situation we will be looking at carefully as details of more of the affinity arrangements are disclosed."

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