Stakeholder pensions

A simplified, cheaper version of a personal pension is a stakeholder pension.

They are available as personal pensions that you can take out yourself and through employers as a form of company pension scheme. Employers who choose not to offer a some other form of company scheme must give employees access to a stakeholder pension scheme and can choose whether or not to contribute.

Stakeholder pensions carry low charges and were designed for people who currently do not have access to an occupational pension or a good-value personal pension to save for their retirement, although they are available to anyone who wants one. They may interest you if you are self-employed or do not have an income of your own but can afford to save for a pension. As with all pensions, you should compare stakeholder pensions with the other pension options available so you can make an informed decision about which option is best for you. For instance, if your employer runs an occupational scheme, it will normally be a better deal for you than any pension you take out yourself.

The charges that stakeholder pensions can make are as follows: 1.5% of the value of your pension fund each year to manage your fund. The law also allows stakeholder pension providers to recover costs and charges they have to pay for certain other things. For example, if they have to pay any stamp duty or other charges for buying and selling investments for your fund, or for particular circumstances such as the costs of sharing a pension when a couple divorce. These expenses are found in other pensions, not just stakeholder pensions. Stakeholder pensions are also flexible. You can transfer to another scheme at no cost and you can stop, start and vary contributions without any penalties.