UK Stakeholder Pension Guide
A stakeholder pension is a type of personal pension plan introduced in 2001 to make pensions cheaper and more accessible, particularly to those without access to a company pension scheme.
Like other personal pensions, you pay money in, it is invested and you use the fund you have built up to buy an annuity when you retire. But as with all pensions, there is an upper limit on contributions (£50,000 for the 2011/12 tax year) and stakeholder pensions have been designed to be a lower risk product with a smaller number of investment options available.
They are subject to a number of minimum standards that ensure they offer value for money, flexibility and security.
This means fees that are capped at 1.5 per cent a year for the first ten years and one per cent after that, whereas many personal pension providers will charge you much more.
You can switch to a different pension provider without being penalised, you can pay in as little as £20 as irregularly as you like and stop, restart or change contributions whenever you like without facing penalty fees.
The scheme is run by trustees or an authorised stakeholder manager who must ensure it meets various legal requirements.
Stakeholder pensions can be taken out directly with a number of providers and some can be set up through your employer. Your employer should be offering you the chance to join a stakeholder pension if there is no company scheme set up and there are more than five employees at the company.
