Charges / Cost of Stakeholder Pensions UK
The biggest difference with the old style UK personal pensions is that there are no initial charges. However some personal pensions have changed and are now offering this aswell.
The other most obvious difference with personal pensions is that the ongoing charges are a maximum of one percent a year of the value of your pension fund.
For example, if your pension fund is £1,000 you would pay £10 a year. Personal pensions used to cost about 5% a year! Added to the effect of inflation this meant that savers were rarely happy with the results.
Actually it's become apparent since the launch of Stakeholder pensions that the providers can charge more than 1% a year.
"As well as the 1% the law allows providers to recover costs and charges they have to pay for certain other things. For example. stamp duty.other charges for buying and selling investments for your fund. the costs of sharing a pension when a couple divorce." (The DSS).
The Financial Services Authority reportedly says these could bring the average Stakeholder charges to 1.3% a year.
Well now that's a 30% rise on the much publicised "1% maximum charge".
This is a good lesson in the wonderful world of financial services. When something is written in stone and shouted from the rooftops by all the politicians and experts for several months, don't believe it for a minute.
Assume they're either wrong or lying and check it for yourself by asking your potential provider in writing and await a clear-cut explanation back in plain English. (Then file the correspondence in a fireproof box to drag out when you're 75 and the b***rds are swearing on their mother's grave that they would never had said any such thing).
If you don't feel the pension provider gives you a straight answer then vote with your feet.
See how you can get the cheapest Stakeholder pension
Stakeholder Pensions Full Contents
Stakeholders and Occupational Pensions
If you are in an Occupational pension scheme and earn up to approx £30,000 gross a year then you can contribute to a stakeholder at the same time as your occupational pension ie in parallel.
You'd need to ask an IFA exactly how much you could be putting into both.
Any organisation with more than 5 employees has to provide a stakeholder pension scheme for their employees.
However, as with existing occupational pension plans, they don't have to make contributions themselves.
It may turn out that all that this means for an unconcerned employer is they may only have to invite a pension provider over to talk to the staff.
If you want to discuss any of this with an IFA we can put you in contact with one. See Find me an IFA
Stakeholder Pensions Full Contents
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