Introduction
The Government introduced a new type of pension scheme
called Stakeholder pensions in April 2001.
This is essentially a new type of personal pension.
The difference is that they have limits to how much they cost (ie
their charges) and they are much more flexible.
In other words they are much fairer to the consumer than the old
style personal pensions. (You can read more about this in charges
and flexibility)
This came about for a number of reasons, mainly the various pensions
scandals which exposed gross
overcharging and the problem of people not saving enough for their
retirement.
It's clear that the state pension
will not be sufficient to support future pensioners. Today's pensioners
are being paid for by Today's tax payers (despite them having paid
their NI
contributions and taxes all their working lives). No money is
being put aside for the future.
Compared to this is the problem of people Today, particularly the
less well off, not saving for a pension.
It's estimated that one in three pensioners will be dependent on
income support by 2050.
However take up of the stakeholder pension has been well below
expectations. It seems that it has mainly benefitted the rich by
providing them with a vehicle for playing with their money, for
example as a way of saving for their childrens' futures.
Stakeholder Pensions Full Contents
Who's it for?
The UK Stakeholder pension was supposed to be aimed at those on
"moderate earnings" i.e. between £9,500 and £21,600 pa.
But, after it's launch, the government claimed it was always intended
for anyone.
Anyone from a newborn baby to a granny can have a Stakeholder Pension.
Stakeholder Pensions Full Contents
How much can you pay in?
If you are not earning, The maximum you can put
into a Stakeholder is £3,600 pa gross (i.e. including the tax
benefit)
If you are earning the same limits apply as for
personal and occupational pensions ie
| Age |
% of relevant
Gross earnings |
| To 35 |
17.5% |
| 36 - 45 |
20% |
| 46 - 50 |
25% |
| 51 - 55 |
30% |
| 56 - 60 |
35% |
| 61 - 74 |
40% |
Up to a cut off point of £91,800 a year i.e. the
maximum you can put in is a percentage of your earnings up to £91,800
a year - depending on your age as in the table above.
So if you are aged 61 and earning £100,000 a year you can only
put in 40% of £91,800 a year.
Do check these figures as they may vary from time to time. Anyone
who provides stakeholder pensions should easily be able to tell
you the latest position.
Stakeholder Pensions Full Contents
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