A Stakeholder Pension is a type of Personal Pension Plan , intended primarily for those who do not belong to a company pension scheme or who are self-employed, which invests the money a person saves and uses the fund on retirement to buy a pension from a pension provider.
Like any personal pension it is designed to offer a lump sum and income in retirement and can be taken out by any UK citizen under the age of 75. It can also be provided for a spouse, partner or children (who will take over the pension when they turn 18
The government has prescribed minimum standards when in comes to stakeholder pensions:
- Capped charging, at 1.5% for the first ten years and 1% thereafter; management charges can’t be more than 1.5% of the fund’s value for the first 10 years and 1% after that
- You must be able to start and stop payments when you want or switch providers without being charged
- They have to meet certain security standards, eg have independent trustees and auditors
You can start making payments into a stakeholder pension from £20 per month. You can pay weekly or monthly. If you don’t want to make regular payments you can pay lump sums any time you want.
*The value of pension and the income they produce can fall as well as rise. You may get back less than you invested.