Transfer To A Stakeholder Pension

Should You Transfer To A Stakeholder Pension?

According to recent research the amount of stakeholder pensions is set to rise as more people are interested in transfer to a stakeholder pension rather than staying with their personal pension plans. So, what benefits can Stakeholder Pensions offer and how do you know if transfer to a stakeholder pension might be the right way forward for you?

Transfer To A Stakeholder Pension - What Is A Stakeholder Pension?

Introduced by the government in 2001, as a means of encouraging saving for retirement, a stakeholder pension can be defined as personal pension arrangements aimed at employees on low to middle incomes, which is regarded as being between £10,000 and £20,000 per annum. The Stakeholder Pension was originally introduced as the Government's acknowledgement of the looming pension crisis and the realisation that the basic state pension is unlikely to see the majority of people through their old age. Every company with more than five employees is legally required to provide a Stakeholder Pension Scheme.

Transfer To A Stakeholder Pension - What Are The Benefits Of Transfer To A Stakeholder Pension?

Some of the main benefits to be enjoyed from transfer to a Stakeholder Pension include:

• Compared to PPPs a stakeholder pension offers you a cheaper and more flexible pension scheme option (the maximum charge is set at 1.5% for the first ten years and 1% thereafter).
• Any UK resident under the age of 75 - even those who are unemployed - can transfer to a Stakeholder Pension.
• You can transfer the benefits of your present personal pension to a Stakeholder Pension penalty free.
• Up to 10% of the premium can be used for life assurance.
• Your employer can match your contribution into your Stakeholder plan which means you will benefit from two contributions.
• It is possible to take breaks from contributions without suffering penalisation.

Transfer To A Stakeholder Pension - When Is It Right To Transfer To A Stakeholder Pension?

It may be beneficial to transfer to a stakeholder pension if you meet any of the following conditions:

• You are on a low to middle salary, earning between £10,000 and £20,000.
• Your company does not offer a company pension.
• You are unemployed or on less than £10,000 a year but can financially still afford to make a contribution.

It is however always advisable to discuss transfer to a Stakeholder Pension with an independent financial adviser.