Stakeholder Pension Schemes

A Stakeholder Pension is a type of Personal Pension Plan designed to provide a lump sum and income in retirement. As with a Personal Pension Plan, it is available to any United Kingdom resident under the age of 75.

You do not have to be in employment to take out a Stakeholder Pension and you can also provide a Stakeholder Pension for your spouse/partner or your child/children. The policy reverts to the child/children at the age of 18.

A Stakeholder Pension incorporates a set of minimum standards established by the Government, which include:

• A capped charging structure which is a maximum of 1.5% per year for the first 10 years and 1% per year thereafter
• The minimum contribution cannot be greater than £20 in any period whether regular or a one-off payment
• There are no penalties on stopping contributions to an individual's fund or on transferring the benefits to another scheme
• Crystallisation age can be at anytime between the age of 55 and 75.
• At retirement, the option exists to take a quarter of the fund as a tax-free amount

The key to Stakeholder as to any other pension is to start contributing as early as possible and keep making contributions for as long as possible. That way your pension pot has time to fill up, and for the investment returns on the fund to compound through reinvestment over many years. The result should be a significant sum of money to invest when you retire.

A pension is a long term investment. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

The value of your investment and income from it is not guaranteed it can go down as well as up due to fluctuations in investment markets, and you may not get back the full amount invested.

Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor