Stakeholder pension a bad option?

Abatement

I've been reading a lot on the investment forum and monevator over the last couple of days, and have seen a couple of passing comments about how stakeholder pensions are not the best way for people to invest in equities, but without explaining why this is the case?

Would anyone care to explain (or point me in the direction of a not-too-technical article)?

xylophone

https://www.moneyadviceservice.org.uk/en/articles/stakeholder-pensions

http://pensionsorter.co.uk/stakeholder-pension-comparison/

It's a case of horses for courses? The stakeholder is simple and flexible and has low minimum contributions- there would be a choice of funds.

http://www.moneywise.co.uk/pensions/annuities/the-best-pension-providers-2014

http://www.aviva.co.uk/stakeholder-pension/

https://www.standardlife.co.uk/c1/accounts-and-services/pensions/stakeholder-pension-funds.page

Abatement

Thanks. So it's with prudential, and it looks like I'm being charged around 0.5% per year for investment in a range of fairly bog standard index tracking funds (all equities at the moment). Would I be better off moving the money into a personal pension and just investing it myself into low fee trackers?

dunstonh

ave seen a couple of passing comments about how stakeholder pensions are not the best way for people to invest in equities, but without explaining why this is the case?

Stakeholder pensions came about in 2001 and had charges lower than personal pensions at that time. However, things moved on and over the years, the providers introduced explicitly charged personal pensions which would be cheaper than the stakeholder (especially on amounts above £20k where fund based discounts would kick in).

This does not mean stakeholders are unsuitable and if you get a stakeholder on discounted terms, such as the 0.5% you mention, then you are not going to save much on a personal pension (where 0.4% is possible - less if you move into larger amounts).

For many people, they will find that a personal pension can offer the best value. However, it really depends on which one you buy and where from.