What is a Stakeholder Pension?

Retirement planning

A stakeholder pension is a type of personal pension which builds up a pot of money to then use to provide income in retirement.  They have to meet certain standards to ensure they are flexible and have a limit on charges.  For example:

  • Providers can only charge fees of up to one and a half per cent  of your pension fund each year for the first 10 years you hold the product, and thereafter up to one per cent
  • You can switch to a different pension provider without the provider you leave charging you
  • You can start contributions from as little as £20, and pay weekly, monthly or at less regular intervals
  • You can stop, re-start or change your contributions whenever you want – no penalty fees apply
  • Money can be switched between funds as often as you wish with no additional charges

Stakeholder pensions may be suitable if:

  • You are not working but can afford to pay for a pension
  • Your employer does not offer a company pension scheme
  • You are on a moderate income and wish to top up the money you would get from a company pension

A stakeholder may not be the best choice if you wish to have a wider investment choice, paying substantially higher premiums, or wish to make specialist investments.