Stakeholder Pensions
Get Independent Financial Advice and Planning (from us
of course...) on this important feature.
The current
situation:
v The
State pension in the
v According
to a survey in April 2005, less than half of people over 45 were saving towards
their pension at all.
v We
have an ageing population with the likelihood that 25% of those born just after
the end of World War II will live to be 100.
v You
can imagine what that will do to financing pensions and long term care for the
old!
v Perhaps
our politicians are diffident about telling us, but the bottom line is that the
State can't afford to keep us.
We all need to make independent provision for
retirement!
From April 2001 Stakeholder Pensions has been one way of doing this.
So what are Stakeholder Pensions and why are they
being introduced?
The Government wants to encourage more people to start saving for their
own retirement. Stakeholder Pensions are being introduced to make it easier
(they say...) for everyone to do just that.
Though the single parents I know are more concerned about if they have
enough for this week’s groceries than whether they put £50 or £100 in a pension
scheme. It’s a bit like Marie Antoinette
saying, “Let them eat cake!”
The main features (in brief) of a Stakeholder Pension
are:
It is simple and low cost, with low
charges. (Though low charges can mean
low performance as well, if the product provider can’t afford to put its best
people on the investment team.)
It is flexible, so you can stop and
start payments at any time, with no penalty.
The minimum contribution is £20.
Individuals can contribute up to
£2,808 per year with the Inland Revenue adding £22 to every £78 put in,
boosting the maximum annual contribution to £3,600. In certain circumstances,
the maximum contribution can be higher
An individual's employer can also
make contributions. They count towards the maximum.
On retirement, up to 25% of the fund can be taken as a
tax-free lump sum.
Funds can be transferred into a
Stakeholder Pension from other pension schemes.
Parents, grand/Godparents, Aunt Agatha
et al can take out a Stakeholder Pension for little Johnny (or Jemima) – a good
way of reducing Inheritance Tax (IHT) and helping secure a child’s long term
future.
Notes: The value of
investments may rise or fall. Past performance is not necessarily a guide to
the future.