Stakeholder Pensions
Stakeholder pensions could be a good option for those currently earning more than around £10,000 a year although they may also interest higher earners and non-earners.
Stakeholder pensions have to meet a number of minimum standards to ensure they offer value for money, flexibility and security.
The law allows the pension provider to recover certain other costs incurred, for example stamp duty or other charges for buying and selling investments for the fund, or the cost of sharing a pension when a couple divorce. These expenses are found in other pension schemes, not just stakeholder pensions.
No extra charges can be made if the member stops paying in, or wishes to transfer to another scheme.
Any extra services, and any extra charges not allowed for by law, must be optional. Extra services must be offered under a separate contract with clearly defined charges.
A Stakeholder scheme can be established under a trust. A scheme may also be established where there is a contract between the manager of the scheme and its members. Stakeholder pension scheme managers must be authorised by the Financial Services Authority.
Schemes must provide information and explanatory material to potential members, but will not be required to offer individual financial advice within the 1.5% management charge. Schemes may provide individual advice within the charge limit if they wish, or charge a separate fee.
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