What You Need To Know About Stakeholder Pensions
byon 07-03-2012 at 06:03 AM (166 Views)
"So first of all what is a stakeholder pension? Nicely it is not a new sort of pension so to speak, but it is a personal pension which has a set of conditions under which it must operate in order to be calle...
For those of you who are thinking about planning for your retirement, you will need to do a bit of research on pensions to find the best way to save for your future retirement. This post is about stakeholder pensions and will explain a bit about them and how they perform.
So first of all what is a stakeholder pension? Nicely it is not a new kind of pension so to speak, but it is a personal pension which has a set of conditions below which it must operate in order to be known as a stakeholder pension. It is not restricted to becoming a personal pension as it can also be a set of conditions which applies to a cash obtain occupational scheme.
The objective of the set of conditions is to make the pension simple, effortless and good worth for cash. So what are the set of conditions that apply to stakeholder pensions then? Nicely here are the minimal standards that apply to it:
1. The charges must be low at about 1% of the fund invested each year.
two. It ought to be designed to be easy which is done by having a standard investment selection so that you do not have to choose the investments yourself.
3. It must be portable, meaning that you can transfer the stakeholder pension on to a distinct pension which can be one more stakeholder pension or an additional personal pension. Also if you do this you would not be penalised for transferring it.
4. The pension provider ought to keep you informed of any changes in the charges you have to spend for it by letting you know one month ahead of the changes take spot. They must also send you a statement at least once a year so you are kept up to date with your account.
five. The minimal contribution should be 20 and you need to not be obliged to pay in every month unless you wish to do so.
So what are the benefits of a stakeholder pension? The major advantages are that it has low charges, that it has tax strengths, that they are easy to understand and relatively simple, are normally speaking very good value for funds and that you can transfer it to another pension without incurring any fees.
Are there any disadvantages to it? Well the major disadvantages are that the pension amount you will get in the future is not predictable, that there is an investment risk and that there is no guarantee that your stakeholder pension will preserve pace with cost inflation. guide to cashing in pensions"