Stakeholder Pensions

EdInvestor

Pal wrote:

Also note that Stakeholder Pension charges can NEVER be changed just because you leave your employer or stop contributing.

Well thanks for that Pal, it's nice to know

That is just EdInvestor desperately misguided attempts at negative spin.

Nah, I'm not desperate really.

Ed is mistaking charges with the effect of charges. 1/3rd of your fund is not eaten away by charges. That is a totally negative and inaccurate spin. The correct wording would be that if no charges were taken, your fund would be higher.

Err, well, yes.

For the effects of charges on stakeholder pensions (and other products), check the offcial regulator's site :

www.fsa.gov.uk/tables

The 30% figure is from Adair Turner's Pension Commission report, I didn't make it up, guys, it's well known.

dunstonh

They are not charges though Ed. Its what the fund would have been had no charges, of any sort existed. It includes the compounding of growth on that charge. A very misleading column.

Its only shown on explicit charged contracts and not implicit charged contracts. This can make more expensive implicit contracts appear cheaper than low cost explicit charged contracts. So, by it's self, it can do more damage than good. It can also confuse the whole issue.

EdInvestor

Pal wrote:

Also note that Stakeholder Pension charges can NEVER be changed just because you leave your employer or stop contributing.

Just a quick follow up on this one if I may.

Let's say Lally's company negotiates a group stakeholder with an annual management charge of 0.8% ( on the usual "buy in bulk" type basis.)

You are saying, are you, that if Lally leaves the company and either keeps contributing or stops, then her pension will continue to atttract the same 0.8% charge forever? It cannot be increased?

I ask this because when stakeholder pensions first started the maximum annual fee that could be charged was 1%.This has since gone up to 1.5%, though it may be that few people are paying the full amount.

But is there anything to stop the insurer from putting the charge on Lally's pension up to 1.5% later?

It doesn't look like much of a change, but it makes a major difference over a long period.

dunstonh

You are saying, are you, that if Lally leaves the company and either keeps contributing or stops, then her pension will continue to atttract the same 0.8% charge forever? It cannot be increased?

The terms at the start are usually carried over.

But is there anything to stop the insurer from putting the charge on Lally's pension up to 1.5% later?

The extra 0.5% is either put on at the start or not at all. Top ups may get it but not the original amount.