Is your stakeholder pension working
as hard as it should?
Stakeholder Pensions, introduced in 2001, are a type of defined contribution pension, designed as a simple pension option. They are individual agreements between you and a pension provider, although there is no cap to the number of stakeholder pensions you can hold, there are limits to how much you can pay in during the year.
A stakeholder pension could be a worthwhile investment option for people on lower or changeable employment income, like contract / seasonal workers and the self-employed.
Stakeholder pensions and retirement
Due to pension freedoms introduced in 2015, you can now access your pension at aged 55 and withdraw 25% as a tax-free lump-sum, should you wish. The value of your stakeholder pension is linked to the following:
- the amount of money you’ve invested
- when you made the investments
- the investment growth of your pension
- the level of charges made by the pension provider
The amount of income you may receive through a stakeholder pension can vary depending on the policy options selected. Factors including income paid in the event of your death, income increases due to inflation and even the frequency at which you wish to be paid can all affect the value of the funds you receive.
What’s best for you
and your pension?
It is always advisable to get professional financial help when investing in your future and understanding what the best option for you is when you retire.
At Pension Works, we offer a full, independent retirement planning service, to help you get the most from your pension savings. We will assess your current stakeholder pensions or any other private pensions you may have for free and advise on how best to invest your savings to reach your retirement goals.
To start your free stakeholder pension assessment, call 0808 164 2664 today, or start a free Pension HealthCheck online.
How does a stakeholder pension work?
Due to stakeholder pensions’ simplicity and stability, people within the UK use them as investments for their children to build up retirement benefits from an early age.
The Government set the minimum standards that stakeholder pensions and their providers need to follow. These include:
- Limited fund charges
- Charge-free transfers
- Flexible contributions
- Low-value investments
Peace of mind
We work with all major UK pension providers allowing us to find the pension that helps you meet your retirement goals, and ensures your retirement is in experienced hands.
Pros and Cons of Stakeholder pensions
Stakeholder pensions, introduced in 2001, were a simple and effective way of saving for retirement. They are aimed at people on lower incomes or part-time savers, helping people to build up a pension pot to deliver a more comfortable retirement.
Great for part-time savers – a stakeholder pension could be a good idea as they may not penalise you for not irregular savings, unlike a regular private pension.
Simple – designed to be simple and easy to understand, stakeholder pensions generally had limited funds in which to invest and a transparent fee structure that wouldn’t exceed 1.5% annually.
Multiple person pay-in – To boost the pension pot, other people could pay into your stakeholder pension, like a savings account. The flexible payment is excellent for people who have set-up a stakeholder pension for their children or even grand-children.
Higher fees – although when first introduced stakeholder pensions had lower fees, they haven’t moved on with the pension market and now modern pension funds charge 0.5%. The difference can be huge, depending on your pension fund. Using our simple pension calculator can demonstrate the impact this can have.
Limited investment choices – Modern personal pensions have a range of investment choices that should be aligned to your investment attitude to risk. Due to stakeholder pension simplicity, they offer a limited selection of investment funds which may restrict your opportunity for growth.
Old-style pension – As pensions have evolved, many now offer online and app access so you can keep track of your investment funds 24 hours a day. An old stakeholder pension may only be paper-based and not allow you to make any changes to your fund strategy.
We can advise on:
There are several types of pension annuities you can buy, so going DIY when buying an annuity could be a mistake. By searching the open annuity market, there may be another provider that will give you a better annuity rate for your pension pot. Our financial advisers can work with you to find the best annuity for you, and one that could potentially give you more guaranteed income in retirement.
It’s critical to keep a close eye on your private pension savings. Moving your pensions into one policy could potentially make it easier to manage and reduce the chances of losing track of your money. We can advise on whether pension consolidation is in your best interests and if you can save money on charges by moving your personal pensions and we can manage all the transfers for you.
We can help you to access your tax-free cash if you’re over 55 years of age, or if your pension doesn’t allow drawdown, move your pension to give you more flexibility. Our pension experts can offer advice on the best way of accessing your funds and highlight the impacts of taking your money early could have on your future.
If retirement is on the horizon, our financial advisers can help you to put a plan together, to make sure you’re on track for the comfortable retirement you deserve. We can also advise on if buying an annuity or taking your pension through pension drawdown is the best option for you and your future.
Private pension performance can be volatile, and your private pension could decline in value quickly. We can check your pension performance to ensure you are not losing out on valuable pension funds for your retirement.
When considering transferring your pension(s) to another provider, there are many things you need to think about, but our Independent Financial Advisers can work through all the options to help you make informed choices.
Unlike traditional Financial Advisers, we aim to be more flexible and available when you need us. Our service is telephone and email based, allowing us to work for you at a time that is most suitable for you. This flexibility gives you access to one of our fully qualified and FCA regulated Independent Financial Advisers in the comfort of your home and without the need to book an appointment weeks in advance.
Although we are an online and telephone business, your details and information are fully secure. Any data you provide through our website is encrypted and also shielded with multiple layers of security for your protection.
As a forward thinking online & telephone based business, this enables us to keep our fees low, so that we can pass those savings on to you, hopefully taking you closer toward the retirement you desire.
Stakeholder Pension Fees Comparison Calculator
Our free pension assessment will carefully assess whether your stakeholder pension is charging you more in fees compared to a modern private pension, which could be preventing you from retiring with extra funds.
Simply provide your stakeholder pension pot size and age below, to calculate how much we could help your pension grow:
The higher the charges, the longer it may take you to retire and the less you could be retiring with.