Stakeholder Pension

Published / Last Updated on 17/05/2021

Advice on Stakeholder Pensions

A Stakeholder pension is a low charges private pension scheme that has been available since 2001. 

Features of stakeholder pensions:

  • No entry charges or exit charges
  • No transfer or early retirement penalties
  • Maximum fund charge of 1.5% pa for 10 years and 1.0% pa thereafter 
  • Contributions from £20 per month

What is in Stakeholder Pensions:

For stakeholder pension advice contact us.

1. Stakeholder Explained

A stakeholder pension is a low charges private pension scheme that has been available since 2001.  

There are no entry charges, no exit charges no transfer penalties and no early retirement penalties.

Simple charges:

  • A maximum fund charge by the pension company of 1.5% pa for the first 10 years
  • A maximum fund charge pension company of 1.0% pa thereafter

This makes stakeholder pensions very simple to understand with no confusing hidden charges, unlike most peoples pensions.

Even Better - Fantastic - Nil Commission Pension Contracts

Working on a fee basis, we obtain discounted pension contracts for our clients with annual management charges below 1.0% pa.

This may seem insignifcant.  But compare the following:

  • Example Pension Scheme: £30,000 fund.  Normal Annual Management Charge 1.5% pa.
  • This means a deduction by the pension company of £450 per year and rising when the value of your pension fund is bigger.

Example Nil Commission Pension Plan Through Us

Annual charge 0.7% pa (for larger funds we can get charges as low as 0.1% - 0.35% pa).

  • £30,000 fund, equivalent annual management charge of £210 saving hundreds of pounds.
  • This is not a one off saving.
  • This is a yearly saving.
  • We are independent and can choose from the whole market of pension companies for you.

Fee Based Advice:  contact us about paying a one off fee and working on a nil commission basis.

Read our Commissions versus Fees article - Johnny Salesman






2. Pensions for All

Low charged stakeholder pension funds are available to save in, basically for all people. 

Whether you are young, old, working, not working, you are able to contribute to a Stakeholder pension.

You are also permitted to invest in a stakeholder pension for your children or grandchildren whether they are working or non-working.

You can even invest in a stakeholder pension if you live overseas or if you are a non-UK National.

Tax Relief: Relevant Individuals:

Whether you receive tax relief on the contributions you make to a stakeholder pension will depend upon whether you are deemed a UK Relevant Individual.

3. Pension Tax Relief

Are you entitled to Pension Tax Relief? Only UK Relevant Individuals receive tax incentives.  There are four sets of rules for pension tax relief:

Low Earners and Non Taxpayers

  • 20% Pension Tax relief (even as a non-tax payer) on your own contributions but limited to a maximum gross yearly contribution into your pension of £3,600 each year if you have no earnings or if you have earnings below £3,600.

20% Tax Payers = 20% Pension Tax Relief:

  • In simple terms, if you pay income tax at Basic Rate Tax (20% from 6 April 2008), you receive the same income tax relief on pension contributions that you pay.
  • If you pay in £80, the government will add £20.00 in pension tax relief to make it up to £100.
  • Put it another way, for every £1.00 you invest, the government will give pension tax relief and add an extra 25p to your pension.

40% Higher Rate Tax Payers = 40% Pension Tax Relief ... but be careful if you are a high earner.

  • Higher rate tax payers may receive up to 40% pension tax relief.  
  • 20% Basic Tax Relief is usually collected in the same way as 20% Tax Payers - see above.
  • 20% High Tax is usually granted by a tax refund when you file your tax return.

£150,000 + High Earner?  Do you earn this or more?  Pension Tax Relief has changed dramatically for you.

4. Help for Individuals

There are many ways you can get help with your Stakeholder pension, you can:

  • Request advice from us
  • Do your own research using our complete retirement and pension sites

5. Transfer Stakeholder Pension

Stakeholder Pensions have annual management charges as high as 1.5% pa and as low as 0.5%pa.

They are transparent, penalty free simple pensions.

You may wish to consider a stakeholder pension transfer for

  • 1.  An existing stakeholder pension that has higher charges and you wish to transfer to a nil commission/low charged stakeholder pension to make or save money
  • 2.  Any other existing pension that has higher charges and you wish to transfer to a nil commission/low charged stakeholder pension to make or save money

For advice with stakeholder pensions, contact us.

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Introduction to Pension Tax Relief

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