Stakeholder Pension
A stakeholder pension plan offers the cheapest charges with a limited investment range
How stakeholder pensions work
Stakeholder pensions are a type of personal pension which have to meet certain government standards to ensure they offer low charges and are flexible
The minimum payments are low and you can stop and re-start payments whenever you wish.
Stakeholder pensions work in much the same way as other private pensions. You pay money into your pension to build up your pension fund.
The government gives you tax relief on your contributions to boost the value of your pension.
Currently, for every £78.00 that a basic rate taxpayer contributes to a stakeholder pension scheme, the government will pay a further £22.00 direct to the scheme.
The managers of the stakeholder pension scheme invest the pension fund on your behalf.
The value of your pension fund will be based on how much you have contributed and how well the fund's investments have performed.
When you retire, you use the fund you have built up to buy an annuity (a regular income payable for life) from a life insurance company of your choice.
Do you need a stakeholder pension?
This depends on:
- How much you can afford to save for your retirement
- How much you are likely to receive from other pensions (basic and additional State pension, occupational pensions and/or other personal pensions
