The take up of Stakeholder pensions has been disappointing. Should we now dub it the “Mistake-holder pension', or is it a concept whose time will come? What has gone wrong?

It's never a good idea to go round trying to fix things that are not broken. The present government inherited the best pension system in Europe. British people saved more, and looked forward to a better income in old age as a result. The Thatcher reforms, which gave people many tax incentives to opt out of the state system and put money aside for their retirement, worked for many.

We watched as continental schemes tumbled. The Italian government had to admit they could not honour all the promises. The scheme was so generous it threatened to bankrupt the state. All unfunded, the promises were so much politicians' hot air. So they put up the retirement age, and cut down the future benefits. France and Germany are engaged in equally difficult debates about their unfunded promises.

In Britain we just kept saving. Many liked the rebate of National Insurance when they opted out of state provision, preferring something better where they could see the money they had saved. Those who didn't could stick with the government's full scheme. The more they earned, the more pension they could look forward to.

Labour never liked the personal portable pensions the Conservatives introduced. They used some problems created by a few providers to demand changes.

In power, the government was always on the look out for ways of taxing people that would be invisible. The Treasury's fertile imagination soon lighted on the pensions industry. They saw huge pots of money sitting in employer and personal pension funds, free of income tax and capital gains tax. They saw people using generous tax reliefs on contributions. It was all too much to let go. They decided to reduce the tax breaks for the funds.

The Chancellor announced a new envelope or package for the tax relief, called the Stakeholder pension. He expected relatively low levels of contribution from people on relatively low levels of income. The industry warned him that the ratio of costs to benefits would be less favourable on these sums structured in this way, than they are on more traditional schemes. Indeed, for many of the people he hoped to attract, there was a lot to be said for encouraging collective vehicles for groups of employees, for whole companies or even industry wide schemes to improve the cost/benefit ratio. The government did propose such an alternative at the same time, accepting some of the force of this point.

They ignored advice on tax relief, regulation and costs. I am certainly a fan of more individual choice, and welcome attempts to give individuals singly, rather than in groups, the chance to save. It gives them more flexibility when they want to change jobs, or when their income and lifestyles alter. The problem is that the combined effects of more complex regulation with a reduction in tax relief have made the scheme too marginal for too many people. The better off use them as tax planning schemes for the family, as they are able to circumnavigate the obstacles.

Many in the industry are very cautious about selling these schemes. They know that any complaint of pressure selling or of offering an inappropriate product can cause difficulties for the business concerned. I had a flexible personal pension from my past when I had self-employed earnings. I have now been told that I am not allowed to put any more money into it. If I want to save like that again, I have to start a new scheme through an independent adviser. Businesses are reluctant to take money, even from people who are quite happy to take their own risks.

I wish the Stakeholder pension well. I think the Chancellor should take another look at both the tax relief and the regulatory position, to see how he can make it all a more enticing package, both for the industry and for the people it seeks to serve. The Regulators are only doing their job – they are understandably worried about possible mis-selling. It is not an easy balance to get right, but it is clear at the moment it is not working as successfully as it should. I welcome the Regulator's decision to reconsider polarisation – perhaps he should also look at the rules on selling which can get in the way of people buying as well.