Stakeholder Pensions

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Stakeholder Pensions

The Labour Government introduced low-cost stakeholder pensions to the public in April 2001. This was an attempt partly to encourage more people to save for their old age, and also because wide mistrust over pension mis-selling in the 1980s and 1990s had seen many people shy away from pensions as a way to save for the long term.

Stakeholder pensions, with their low, capped one percent fees and - in almost all cases - easy-to-understand structure, are designed to be particularly suited to the self-employed, low-to-medium earners, or anyone not in work but still receiving income (from state benefits, investment income - even lottery winnings).

To widen its appeal, stakeholder pension contributions can be stopped and started at any time and they feature low monthly contributions (from £20 a month). There are very good tax incentives for paying into a stakeholder pension, however, like almost all personal pension plans, they are taxable when you come to draw them.

Stakeholder pension costs are likely to rise in future. Although the original running charge was capped at one percent or less, the financial services industry complained to the government that such a slender profit margin made them unattractive to promote. This one percent capped threshold running cost charge will now be raised to 1.5 percent from April 2005 (though not all financial players are expected to exercise this right).

For many other alternative ways to build up a fund for retirement, visit us at www.Investments.co.uk

Pensions.co.uk is part of a large network of financial sites created to help advise you on life events, such as buying a house, Mortgages.co.uk; insuring your car - CarInsurances.co.uk; your life - LifeInsurance.co.uk; and your home - HomeInsurance.co.uk.

1998 - 2007 UK Pensions - Planning before, at the onset and during retirement.