Stakeholder pension plans

Personal and Stakeholder pensions are available to most people in the UK, even children, non-earners and some members of occupational pension schemes. Pensions offer a tax efficient way of saving for your retirement. You can pay your money in now and continue to make regular investments if you wish (or not if you don't).
Every time you make a payment, the Government will top this up by 22%. So, you could make a payment of £2808 now and this would automatically be topped up to £3600, (this is the maximum contribution you can make per tax year to pensions if you are not basing your payment on earnings). Eligible higher rate tax payers can claim back up to an additional 18% on their contributions via their tax return.
When you go to take the benefits (any time between the ages of 50 and 75) you can usually draw up to 25% of the fund as a tax free cash lump sum, and the rest is used to provide you with an income for life. This income can be in the form of an annuity. If you are considering converting your pension fund into an annuity please complete our call me back form and a specialist pension advisor will contact you.

The Differences Between Personal and Stakeholder Pensions

Both types of pension have exactly the same eligibility rules, therefore if you are eligible to pay into a Personal Pension, you will also be able to pay into a Stakeholder pension. You will also find that both types of pension will allow a maximum contribution of either £3600 gross per tax year or a percentage of your earnings which is dependent upon your age. This is described in more detail below.
The way in which they differ is that Stakeholder pensions have to meet a set list of criteria that have been laid out by the Government.

These include factors such as:

	Stakeholder pensions can only have one charge, this is an Annual Management Charge and it must be capped at 1% of the fund.
	They must offer a default fund.
	They must allow contributions as low as £20.
	They must allow contributions to be stopped, started, changed or made paid-up without charge.
	There can be no penalty for transferring into or out of a stakeholder scheme.

If a pension does not meet the criteria, it cannot be described as a Stakeholder pension. This means that when you buy a Stakeholder pension, you know it will meet strict standards in terms of charges and flexibility.
Personal Pensions can meet these criteria, but they don't have to. Personal Pensions tend to offer more options than Stakeholder pensions, such as external funds.

Am I eligible?
In order to be eligible for a personal or stakeholder pension, you need to be able to answer 'yes' to both of the following questions:

	Are you under 75 years old?
	Are you classed as a UK resident for tax purposes?

Eligibility for occupational scheme members:
If you are classed as an active member of an occupational pension scheme (as opposed to a retired member), you can still contribute to a personal or stakeholder pension provided you meet these additional criteria:

	Are not a controlling director now (and have not been in any of the last five tax years) and
	You have had earnings of £30,000 or less in any of the last five tax years.

For both of these conditions only tax years from 2000/2001 are taken into account and you cannot utilise the tax year you are currently in.
If you are a member of an occupational pension scheme which only provides death in service benefits, you do not need to adhere to the above two criteria.
If you are an eligible member of an occupational pension scheme, you will be able to contribute up to a maximum of £3600 gross (£2808 net)
You may be able to contribute more if you have a separate source of earnings on which you could substantiate a higher payment, please read on for more information.

How much can you pay into a Personal or Stakeholder Pension?
Everybody who is eligible for a Personal or Stakeholder pension can pay in £3600 gross per tax year. It does not matter whether they are a child, employed, retired, etc. this amount applies whatever their employment status.

The £3600 limit includes:

	Your own contribution
	The tax relief you receive from the Inland Revenue
	Any contribution your employer makes
	Any contributions you have already made to Personal or Stakeholder pensions in that tax year.

However, in some cases, you are able to pay in more. In order to do this you need to have earned income. The amount you can contribute is restricted to the following Inland Revenue limits:

Age at start of tax year 2004/05		Percentage of Salary
Up to 35		17.5 %
36 – 45		20 %
46 – 50		25 %
51 – 55		30 %
55 – 60		35 %
61 – 74		40 %

Please note that the maximum earnings on which you can base your pension contribution for the tax year 2004/05 is £102,000. This is known as the earnings cap.

Pension Products
	A V C Pension
	F S A V C Pension
	Group Personal Pension
	Occupational Pension
	Personal Pension
	Pensions for business owners
	State Pensions (SERP's)
	Stakeholder Pension
	FREE pension reviews
	Pension Transfers
	Taking your pension annuity
	What is a pension?
Pension Calculators
	Pension calculator basic
	Pension calculator advanced

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