Stakeholder pensions & auto-enrolment

A stakeholder pension, similar to a personal pension plan, is an alternative for those not employed. It can be set up for your spouse, partner, child, or children, and they can take over the policy after turning 18. It is available to anyone below the age of 75 residing in the UK.

Stakeholder pension minimum standards

Stakeholder pensions must meet certain government standards, including:

• Capped charges of 1.5% for the first ten years, and 1% thereafter.
• Minimum contribution of £20, whether regular or one-off.
• No penalties for transferring or stopping contributions.
• Benefits can be withdrawn from age 55.

Option to take a tax-free lump sum of one quarter of the pension pot upon retirement.

If you pass away before accessing your pension and are younger than 75, your funds are often passed to your spouse or chosen beneficiary without inheritance tax (other taxes may apply).

If you haven’t accessed your pension and pass away after age 75, the pot can still be passed on without inheritance tax. If received as a lump sum, it is taxed at your marginal rate, but if taken as income, it is subject to income tax.

Speaking to an independent financial adviser is the best way to evaluate your retirement options, and our initial advice is free.

Note: Not all inheritance tax planning solutions are regulated by the Financial Conduct Authority.