Stakeholder pensions

A stakeholder pension offers a simple, low cost way to invest for retirement if you're not too concerned about the number of investment options available.

What are the benefits of a stakeholder pension?

• Low running costs
  The running costs are lower than many other traditional personal pensions. Stakeholder pensions have just one charge (the annual management charge), which is currently capped at a maximum of 1.5% for the first 10 years and 1% thereafter.
• Flexibility
  You can stop, start or change your pension contributions, transfer your fund to another provider or change your retirement date to any age over 55 whenever you wish without penalty. (However if you are invested in a ‘with profits’ fund there may be a market value adjustment).
• Tax benefits
  Like all pensions, stakeholders have tax benefits to encourage investors to save for retirement. Your contributions are usually topped up with tax relief from the government, boosting your payments by up to 50% depending on how much tax you pay. Your money is also sheltered from tax within the pension, growing free of capital gains tax and further UK income tax.
  
  Please remember tax rules can change and the value of any benefits depends on your personal circumstances.

Where can I invest?

Stakeholder pensions are designed to be simple and as a result offer a relatively small number of insurance company funds to choose from. While providers typically offer around 20 different funds, they are normally only funds run by that particular pension provider. For example, the Aviva stakeholder pension allows you to invest in Aviva managed funds. You should therefore consider your provider carefully when choosing a stakeholder pension.

Stakeholder pensions often provide life-styling investment options which choose your investments for you, moving them to lower risk investments as you get closer to retirement. This can be helpful if you don’t want to choose investments yourself.

Please remember all stock market investments can fall as well as rise in value so you could get back less than you invest.

When can I access my savings?

A pension is a long term investment designed to provide you with an income in retirement. You can normally start to access the money at any age from 55 onwards. When you decide to start taking an income you can take up to 25% of the pension as a tax free lump sum and the remainder is then used to provide you with a taxable income, often via an annuity.

Apply for a stakeholder pension

Hargreaves Lansdown currently offers a discounted stakeholder pension with Aviva, and a stakeholder pension with Standard Life.

Full information on the specific funds available with each provider can be found by downloading our Stakeholder & Personal Pension New Business Terms. This also contains the commission terms and important investment notes.

If you have a question about stakeholder pensions or you would like to request an application form please contact us on 0117 980 9926.

This is not a personal recommendation to invest. It is crucial you choose the right retirement option for you and if you are unsure how to proceed at retirement, you should seek advice.

If you wish to take advice, please contact our Pensions Helpdesk on 0117 980 9926 and we will put you in touch with an adviser.