Stakeholder Pensions
A Stakeholder pension is a 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 and are not a form of state pension.
To reach as wide an audience as possible, stakeholder schemes are intended to be flexible and easy to understand. Whilst 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, it is not compulsory to save for retirement with a stakeholder or any other savings related product.
Stakeholder pensions are privately run and funded but operate within a standards framework laid down by Government.
Stakeholder plans are individual arrangements which means you can take them with you if you change jobs. You can even carry on contributing to them when you're not working because, in another change to pension rules, the government now allows you to contribute up to a maximum of £3,600 pa into a stakeholder or personal pension plan, and there is no need for evidence of earnings and no minimum age. Furthermore, uniquely amongst pension plans, anyone under the age of seventy five can contribute to a stakeholder plan.
Who’s to stop you starting a stakeholder pension for your children?
An important repercussion of the ‘no penalties’ rule is that you don’t have to delay starting a plan until you find the right provider. You can start a plan straight away. 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 the fact that providers must allow a minimum investment of no more than £20. This provides much needed flexibility compared to personal pensions; for instance you could make a one payment of £20 and if money is then suddenly tight, you can stop payments until such a time as you can afford them again, whenever that may be.