Who should take out a stakeholder
Stakeholder pensions are available to almost everybody in the UK, including people
in employment, fixed contract workers, the self-employed and
people who are not actually working but can afford to make
contributions. It's also possible to contribute to someone
else's stakeholder pension - for instance someone can make
contributions to their non-working partner's stakeholder pension scheme
on their behalf.
How much can I contribute into a stakeholder pension?
It is possible to invest up to £3,600 (including tax
relief) in a uk stakeholder pension scheme each year without
evidence of earnings. However, under certain circumstances
the maximum level of pension contributions may be increased
for people with earnings according to their age and earnings
People who are already a member of an occupational pensions
scheme may also pay up to £3,600 a year into a stakeholder
pension scheme, providing their P60 earnings do not exceed
I am not earning - can I contribute to a stakeholder pension?
Yes, you can make contributions of £3,600 each tax
year irrespective of earnings.
Do I get tax relief on my contributions?
Yes. You pay contributions net of basic rate tax (currently
22%) and the stakeholder pensions provider reclaims the
tax from the Inland Revenue. Higher rate tax relief can
be claimed through your self-assessment tax return after
the end of the tax year.
Will I get tax relief even if I am a non-taxpayer?
Yes, all contributions from individuals will be paid net
of basic rate tax.
Do my contributions have to be on a monthly basis?
No, you can make contributions whenever you want as long
as each contribution is at least £20
Can I reduce or stop my contributions?
Yes. You can change your contribution amount or rate without
being charged (subject to the minimum level of premium).
However, if you are paying your contributions through your
employer you may only be able to change the amount every
6 months, though you can stop making contributions at any
Can I have my contributions back if I change my
No. There is a cooling-off period of 14 days when you first
join the scheme. Once this has expired the contributions
cannot be returned to you. They must be used to provide
benefits, which can be taken anytime between 50 and 75.
Benefits can be paid earlier in the event of death and may
also be paid earlier in case of serious ill health.
How will my money grow?
You can opt to invest your money into a number of funds with Standard Life including
the stockmarket, property, cash and gilt funds. If you do not specify a fund,
Standard Life will enter you into their default Stakeholder
How and when is my pension paid?
You can draw your pension any time between your 50th and
75th birthday, the money you have contributed to your pension
fund is used to purchase an annuity. An annuity is an arrangement
by which a life insurance company pays you a regular income,
usually for life, in return for a lump-sum premium. However,
you cannot buy an annuity before age 60 with the part of
your pension fund that has been built up from rebates of
National Insurance contributions (if you contracted out
of the State Second Pension, S2P).
You are not obliged to buy an annuity from your stakeholder
provider so you can shop around to compare what other companies
have to offer.
Under current tax legislation, at retirement you may take
25% of the value of your fund as a tax free lump sum,
the remainder is then used to purchase an annuity (this
does not apply to S2P Contributions).