The government's flagship stakeholder pension scheme is failing to attract the public, new figures have suggested.

The evidence is that stakeholders fall far short of providing a solution David Willetts, Shadow Work & Pensions Secretary

In a report, the Association of British Insurers (ABI) says sales of stakeholders - a low-cost pension scheme introduced in April 2001 - has "stalled".

The finding will be a blow to the government as it is under increasing pressure to solve the pensions crisis, and encourage Britons to save more for their retirement.

One financial expert said that the insurance industry had turned its back on stakeholders, leaving the concept "dead in the water".

Empty boxes

All firms with more than five employees are bound by law to offer workers access to a stakeholder scheme, a low-cost pension specifically designed for those on low and middle incomes.

Put simply they are a disaster John Minchin, director, Pension Line

Although firms have in the main complied with the letter of the law, the ABI said that nine out of 10 company stakeholder schemes had no members in them.

And only 9% of employers were making contributions to stakeholder pension schemes on behalf of their employees.

This lack of employer backing was cited by the ABI as a major reason for poor take-up of the schemes.

Initially, sales of stakeholders were encouraging, but the ABI said sales have now shrunk to fewer than 50,000 pensions a month.

Zero take-up

John Minchin, director of pension advisory firm Pension Line, told BBC News Online:

"There is almost zero take -up amongst the target audience.

We are encouraged with the start stakeholders have had Department for Work & Pensions

"Put simply they are a disaster."

In addition, Mr Minchin said the scheme was suffering because of the insurance industry's disenchantment with the government's pension policies.

"The insurers wanted the government to make stakeholders compulsory.

"But this hasn't happened and as a result they have withdrawn from the market and effectively the pension is dead in the water."

Low charges

The ABI believes stakeholders could work, but only if employers make membership of such a scheme, a condition of employment.

David Willetts, the Shadow Work & Pensions Secretary, told BBC News Online that stakeholders have failed to do the job they were designed to do.

"There's a crisis in funded pensions. We all hoped that stakeholders would plug the gap, but the evidence is that they fall far short of providing a solution," he said.

In response, a Department of Work & Pensions (DWP) spokesperson told BBC News Online:

"We are encouraged with the start stakeholders have had - over 1 million sold in 18 months - but it will take time to catch on.

"A big benefit has been that the low charges pattern of stakeholder is being adopted throughout the pension industry."