A Stakeholder pension is a form of low cost Personal pension aimed at encouraging those people who do not currently have pension provision to save for their retirement. They became available on 6th April 2001. They are not a form of state pension.
In order to reach as wide an audience as possible, Stakeholder pension schemes are intended to be flexible and easy to understand. Employers with 5 or more employees have had an obligation to provide their employees with access to a stakeholder pension scheme since 8th October 2001, although it is not compulsory to save for retirement with a Stakeholder Pension plan or any other savings related product.
Stakeholder pension plans are privately managed and funded but must operate within a standard framework laid down by the Government.
Stakeholder Pension plans are very similar to Personal Pension plans; they are individual pension arrangements, meaning that they are personal and portable - you can take them with you if you change jobs.
We can research the relevent market on your behalf to find a suitable Stakeholder Pension plan, it may be that a Stakeholder Pension plan meets your needs for retirement provision. Following the sweeping changes made on the 6th April 2006 to pension legislation (see section on Pension simplification) these contracts are very flexible and can allow tax relievable contributions to be made of up to 100% of your earnings or £3,600 (whichever is the greater) subject to a maximum of £50,000 per annum which is the current annual allowance. Furthermore these plans can be set up for non-working spouses and even children and grandchildren.
If the provider doesn’t perform as well as you expect, you can simply take your fund and transfer it to another provider, without penalty. Another big plus for Stakeholder pensions is that providers must allow a minimum premium of £20. This provides much needed flexibility compared to other Pension contracts where minimum premiums may be higher; furthermore there is flexibility to stop and start contributions with unlimited frequency.
SEE: Stakeholder Summary
A PENSION IS A LONG TERM INVESTMENT THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN. YOUR EVENTUAL INCOME MAY DEPEND ON THE SIZE OF THE FUND AT RETIREMENT, FUTURE INTEREST RATES, AND TAX LEGISLATION