Stakeholder Pensions

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.

Stakeholder summary

• Tax relief on contributions at your highest marginal rate
• A money purchase scheme
• Minimum contribution of not more than £20
• Permissable contribution limit of up to £3,600 pa gross (without evidence of earnings) or 100% of earnings. (subject to the Annual and Lifetime allowance)
• A single annual management charge of not more than 1% of the plan value, taken from the fund/s. There are no up front charges.

You are free (no charges or penalties) to:
- Stop, increase, decrease or restart your pension contributions at any time
- Transfer your money to another stakeholder scheme.

• All plans will have a default investment choice, this is designed to help make purchasing a Stakeholder pension plan easier, but it doesn’t guarantee the default fund will necessarily be the right one for you, we recommend advice be sought.