Personal V Stakeholder

Jandan

:eek:
Am still trying to work out the best pension options and have read the advantages of a stakeholder v the previous personal pension. However is it right that there is a limit to the amount you can invest in a stakeholder which is not the case with a personal?

dunstonh

There is no difference in contribution levels between personal pensions, stakeholder pensions or SIPPs. They are all the same product.

The only difference is the charging methods and the investment options.

The stakeholder pension has a defined charging process that is particulary suited to those closer to retirement. When over 20 years, many personal pensions start to offer lower charges. With the main providers personal pensions also offering the stakeholder funds within them at no extra charge, there is often no reason to go with a stakeholder pension now.

EdInvestor

The basic point about stakeholders is that

1)Their charges are capped at 1.5% (IIRC 1% after 10 years)

2)You can transfer the money out any time and cannot be charged an exit penalty if you decide to leave (possibly excepting if you are in a With profits fund)

3) You can vary or stop contributions at any time without incurring any penalties.


BUT

Because the providers cannot make any money selling these pensions, some of them have made them unattractive by only offering very basic funds to invest in.

All the best funds are kept for their personal pension or SIPP products and the stakeholder normally doesn't offer access to the better external funds now commonly available in the personal pension product.


However it is possible to put together a reasonable stakeholder pension I believe, providing you're willing to do a bit of work hunting around the companies and finding out what they offer. If you pay a fee, an IFA would probably do this for you.

<Removed by Pal to avoid another circular discussion. If you wish to discuss SIPPS, do so within a thread on that topic. The remaining off-topic posts on this thread have been moved to the "Warning re SIPPs" thread at the top of the page.>