Between April 2001 and April 2012 all employers with more than 5 employees had to set up a stakeholder shell in a government attempt to make pensions more accessible to employees. The slightly ludicrous rider was that neither employers nor employees were compelled to contribute. So the net result was that well over 90% of the million plus schemes had no money in them! This is why the requirement was shelved in favour of auto enrolment which was itself introduced in October 2012.
The two key advantages of stakeholder pensions are that they make no entry or exit charge and the annual management charge is a maximum of 1.5%. Most companies now offer personal pension plans with similar features but with more fund links, so a stakeholder friendly contract is probably the way to go. But there remain many plans still in effect and the new charge regime that stakeholder introduced heralded much of the low cost pension flexibility we all enjoy today.
A major advantage with stakeholder rules is that any UK resident can make a contribution and receive tax relief whether they are a taxpayer or not. Non working partners/ spouses should all consider this route. Plans can also be effected for minors… THESE RULES REMAIN IN PLACE…
Instead of building on what had previously been introduced the government has now come with Auto Enrolment. They have also launched a government “sponsored” pension, NEST. This is something totally new and will be state run and controlled. Under auto enrolment employer and employee contributions will be mandatory unless employees decide to opt out individually or the employer puts something better in place!
Contact Us now for further information on stakeholder pension plans.
We are stakeholder pension advisers based in Ashford, Kent.