M&S pensions find few takers

Marks & Spencer Financial Services is struggling to sell its much-hyped stakeholder-friendly pension.

Marks & Spencer Financial Services is struggling to sell its much-hyped stakeholder-friendly pension.

Despite spending thousands of pounds on promoting the low-charge product, the high street retailer has had a disappointing take-up since its launch earlier this year. "When we first launched, we had a positive res-ponse from a lot of new customers," said Chris Larkin, head of communications at M&SFS. "But the take-up in general has not been huge."

M&SFS has sold a combined 55,000 life and pensions policies. It will not say how much of this is pensions business, though financial advisers estimate it makes up a tiny proportion. Virgin Direct, which has sold pensions for the past three years, has 25,000 policyholders and is seeing a steady rise in interest.

Stakeholder pensions are not officially launched until next April but M&SFS, along with a number of other providers, had hoped to capture advance business by introducing stakeholder-friendly products ahead of that date. It charges an annual fee of 0.7 per cent, undercutting Virgin Direct's 1 per cent. But this is becoming a strain. "It does come to a point where you can't cut prices for ever and ever," said Mr Larkin.

With a maximum annual charge of 1 per cent, minimum contributions of no more than £20 and no upfront charges, providers will struggle to make stakeholder pensions pay unless they attract high volumes. Many life firms, like Scottish Life, don't sell them to individuals because they can't yet make them profitable.