What's a Stakeholder Pension Plan?

Stakeholder Pension Plan: Know Your Retirement Planning Options

Discover: Stakeholder Pension Schemes. We'll Here to Share How the Pension Scheme Works & How to Transfer Your Pension Plan Right Now!

What's A Stakeholder Pension Plan

What’s a Stakeholder Pension Plan

The Basics of Stakeholder Pensions

A stakeholder pension is a form of defined contributions pension scheme, and it has a retirement value that’s dependent on how much you contribute and how your investments perform. A stakeholder pension scheme is typically a financial contract between you and your pension provider, and one must adhere to stringent government codes and principles. You can comfortably invest in a stakeholder pension scheme whether you’re a permanent worker, self-employed, or don’t have a job.

How Stakeholder Pensions Work

How Stakeholder Pensions Work

Stakeholder pension schemes are specifically designed to be available to ordinary citizens, and they offer a flexible way for pensioners to build a substantial retirement income. The pension scheme can be particularly life-saving if you receive low wages or are your own boss and might not necessarily meet the conditions required by other pension schemes.

Here’s the thing:

If you’re employed, your boss can choose to make contributions to your stakeholder pension scheme. Nevertheless, your employer isn’t obliged to make any contributions, and you can set up a stakeholder pension scheme by yourself. Moreover, in addition to you and your boss, other individuals, your spouse or civil partner can also make contributions to your stakeholder pension, and you can also pay into theirs.

Group Stakeholder Pension Scheme

An employer at times provides a group stakeholder pension plan, and it typically refers to a group of stakeholder pension plans. Since 1st October 2012, the group stakeholder pension plans have been significantly replaced by the Auto Enrolment Scheme1.

Imagine this:

Suppose you become a part of your boss’ group stakeholder pension plans before the Auto Enrolment plan is put in place and are still paying into it. In that case, your boss is required to process your contributions until you stop making the contributions or quit working at the firm. 

Stakeholder Pension Charges

Stakeholder Pension Charges

If you take the stakeholder pension plan, you have to ensure that it meets the minimum requirements set by the state. These requirements include the fees you’ll be charged and the number of contributions paid.

Capped fees: the yearly management charges are capped at 1.5% every year for the first ten pears and 1% each year, after that. Any UK pension scheme that you move into a stakeholder pension plan has to be acknowledged without any extra charges.

Low-level minimum contributions: the stakeholder pension schemes have to attain a gross contribution amount of €20, or less, whether you make the pension contributions regularly or in a one-off payment. The pension schemes also have to provide you with flexibility, and you can halt or restart making the contributions at any time without incurring any penalties.

Default investment fund: if you don’t want to make the decisions on how your pension pot is invested, there has to be a default fund accessible to you to invest in. It must have a lifestyle choice that automatically transfers your capital to lower-risk investments as you approach the sunset years.

How to Transfer A Stakeholder Pension Scheme

How to Transfer A Stakeholder Pension Scheme

Suppose you resign from your job or stop working entirely. In that case, you can opt to keep paying into your stakeholder pension scheme, and your new boss can also be able to contribute, based on the regulations of the workplace pension plan they provide. You can also stop making any pension contributions at any time and restart once you have enough funds to do so. When you take the break, you can leave your pension savings so that they can keep growing until you retire.

How to Access Your Stakeholder Pension

Like any other defined contributions pension scheme, you can draw funds from your stakeholder pension scheme when you’re 55 years old. When the time is right, you can take up to 25% of the savings as a tax-free lump sum2 and choose to either withdraw the other 75%. You can also use the 75% to buy an annuity, keep it invested through the drawdown, or delay taking out the cash altogether.

Got Questions? Check These First

Is A Stakeholder Pension Any Good?

What Are Stakeholder Pensions?

What's the Difference Between A Stakeholder Pension and A Personal Pension?

Can You Take Money Out of A Stakeholder Pension?

In conclusion

All in all,

The Stakeholder Pension Plan is a great way to know your money will be there when you retire. If you are looking for the best retirement plan, look no further than the Stakeholder Pension Plan. This type of account includes many safeguards that protect your assets and make sure you get what’s rightfully yours in retirement. With so much uncertainty looming over how Social Security benefits will change with each new president elected, it’s more important than ever to take control of your future by funding a stakeholder pension plan today.

You may also like

Editorial Note: This content has been independently collected by the EveryInvestor advisor team and is offered on a non-advised basis. EveryInvestor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.
Taylor Holt - 300x300

Written by
Taylor Holt
Estate Planning Expert

Taylor Is Our Resident Estate Planning Expert. He Knows That Everything Revolving Around Wills or Funeral Planning Can Be a Sensitive Subject That People Don’t Like to Discuss. But He Also Knows How Important It Is to Know All There Is to Know About It. Taylor Makes It His Mission to Spread Awareness About Estate Planning, and We Believe Everyinvestor Is the Best Platform to Do That.

Monique - 300x300

Written by
Monique Pittman
Pensions Expert

Monique Is Our Resident Pensions Expert. Many People Postpone Planning Out Their Pension, Thinking That Is Something They’ll Have to Worry Much Later in Life. Monique Knows How Important It Is to Start Planning Your Pension Early, and She Wants You to Know It Too!

Stakeholder Pension Plan

Written by
Lisa Schilling
Insurance Expert

Lisa Is Our Resident Insurance Expert. She Knows How Important It Is to Be Ready for Any Scenario, Especially When a Family Member Is Involved. Nobody Likes Being Found Unprepared in a Tough Situation! Lisa Can Find the Best Insurance to Cover Your Every Need, Present and Future.

Doyle Edwards - 300x300

Written by
Doyle Edwards
Mortgages Expert

Doyle Is Our Resident Mortgages Expert. He Comes From a Long Line of Financial Gurus, and It Truly Shows. Despite His Young Age, There Is No Question He Cannot Answer When It Comes to Mortgages, and His Ability to See Outside of the Box to Find the Best Mortgage Deals Is Truly Impressive.

jason stubbs 300x300 1.jpg

Written by
Jason Stubbs
Equity Release Expert

Jason Stubbs Is a Specialist in the Equity Release Sector. He Enjoys Helping Older People Who Are Struggling Financially Get Out From Under Financial Pressure.

rachel w.jpg

Rachel Wait
Personal Finance Journalist

Rachel is an experienced finance journalist and editor with a particular interest in personal finance and consumer affairs. She has vast experience writing about money issues, property, insurance, and consumer affairs, and you’ll find her articles regularly featured in top media and newspaper publications.

Reviewed by
Francis Hui
Senior Risk Manager

Having held various high-level roles across the industry, Francis is truly an expert in aiding UK citizens in their financial decisions and risk analysis. His unique insight and statistical knowledge make him the perfect person to help you take your financial future to the next level.
Mark Patterson

Written by
Mark Patterson
Mortgage Expert

Mark Patterson is a well-known expert in mortgages. He has been working as an expert for over 15 years, and he specializes in the UK mortgage market.
kath icon.png

Katherine Read
Consumer Affairs Writer

She writes on the topics of equity release, home reversion, and mortgages.

Nicola Date

Nicola Date
Writer & Journalist

Nicola is a financial writer for EveryInvestor and is passionate about the opportunities that equity release can open up for homeowners. Her extensive business experience and deep understanding of the industry means that she’s always up-to-date with the latest developments.