Stakeholder Pensions

A pension is a very important consideration for anyone that wants to save for their future retirement. Your retirement is the time of life when you will have more time on your hands than you have ever had before, because you will not have work to worry about, and most people will not have to worry about looking after younger children as the kids will have flown the nest and started their own lives by this time.

This is why it is important to have a good pension plan in place, so that you can afford to enjoy life, maintain the quality of life that you have become used to, and make the most of your retirement rather than having to struggle financially.

There are a number of different types of pensions available these days, including stakeholder pensions. Those looking for an affordable and flexible way to save for their future retirement could benefit from stakeholder pensions, which are ideal for those that do not already have a pension plan.

Other types of pensions that have been used or are still used today include private pensions and final salary pensions, which are contributory pensions offered by some companies.

Stakeholder pensions were introduced by the government in order to encourage consumers in the UK to save towards their retirement, amidst concerns that the state pensions would not come anywhere near the amount needed for today’s younger UK residents to keep up with the cost of living by the time they come to retire.

Stakeholder pensions allow consumers to save towards their retirement in an affordable way, and with employers phasing out final salary pension scheme stakeholder pensions have become the flexible, more affordable choice for many people.

The great thing about stakeholder pensions is that they are available to just about anyone. This means people that are currently employed, people that are self employed, those on fixed contracts, and even those that are not working but are able to make contributions into a pension fund.

The flexibility of this type of pension makes it a suitable and viable option for a wide range of people, and provides an effective platform for working towards a brighter and more lucrative retirement.

When it comes to investment limits there are none in place with regards to the amount that can be invested in this type of pension scheme, although you should bear in mind that there are limits with regards to the amount that you can receive tax relief on.

If you are a member of an occupational pensions scheme you can also contribute to a stakeholder pension scheme.

Stakeholder pensions are available as trust scheme, where a board of trustees is used to manage the investment. These pensions can also be set up as non-trust scheme, where a stakeholder manager acts on behalf of the member, and this type of scheme is set up by deed poll.

However, the stakeholder manager, which could be a building society, bank, or insurance company for example, must be FSA approved in order to manage stakeholder schemes.

Tax relief is offered on contributions up to the specified level with a stakeholder pension, and the tax relief is sent directly tom the trustees or manage of the stakeholder scheme depending on the type of stakeholder pension you have opted for.

Also, it is worth remembering that if you opt out of the state pension plan then a rebate of your national insurance contributions can be paid into your stakeholder pension plan instead.