Are you trying to look at a new pension plan? Chances are good that you could really benefit from the new Stakeholder Pensions. They aren’t super new, as they were introduced in April of 2001. However, a lot of UK people are just walking up to them, which means that we definitely want to introduce people to them as much as possible. A lot of people feel that it’s something that benefits only the super wealthy, but this isn’t the case at all.
Did you know even newborns can have a Stakeholder pension? It’s true — and the additional time would actually benefit your children tremendously. However, since you’re probably thinking about your retirement before anyone else’s, we’ll stick to just you for the time being.
You need to know that you can put in different amounts depending on whether or not you are earning money. If you aren’t, then you can only put in 3600 pounds. On the other hand, if you are earning money you can put in over two hundred and fifty five thousand pounds! This is definitely something that you’ll want to look into, because having higher limits will allow you to really catch up on your pension. You can also see why the press initially assumed this would be more or less for the super wealthy, given how much money you can really put away for your retirement.
What’s neat about the Stakeholder pension is that you can move it around to different providers without penalties. If you’re not sure about pension charges, trust us — they are definitely out there.
Stakeholder pensions do have a low charge of about one percent a year. That’s not too much to ask for your money to be managed by a fund that’s calculated to give you the most profit possible.
Keep in mind that Stakeholder pensions aren’t without their own set of problems. For example, these pensions are backed by tracker funds rather than active ones, which means that you might miss out on some gains even when the market is doing well. You need to think about that from year to year and see if a personal pension would be better. Yet if you like the automated feeling behind the Stakeholder pensions, then you definitely want to make sure that you take that into consideration.
When you look at both types of pensions, you’ll find that the Stakeholder type is just a more “refined” form of the personal pension. The traditional style personal pensions have lowered their fees to stay competitive, so you’ll still have to hunt around.
The final point that we’ll add here is that if you have a workplace pension, you’ll need to subtract what you are putting into it from your stakeholder pension. Good luck!