Stakeholder pensions were introduced by the Government in 2001 to provide a low-cost, privately funded supplement to the basic state pension. The legislation requires that any employer with five or more employees makes either a stakeholder pension plan or another suitable pension scheme available to its employees.
Legislative requirements
The Scottish Equitable Group Stakeholder Pension Scheme is government registered, and meets all the legislative requirements, including:
- For the first 10 years charges for the scheme won't exceed 1.5% of the total fund value and no more than 1% after that.
- The scheme must accept any contribution of £20 or more. Contributions can be paid weekly, monthly or as one-off payments, and they can stop and start without incurring charges. If you stop paying contributions into your plan or take a contribution break, your pension may be lower than shown in your personal illustration.
- There should be no charges for transferring in or out of a scheme, or for switching investments between funds.
- There must be a suitable default investment option for members who don't want to make their own investment choices.
A stakeholder pension enables each employee to build up an individual pension fund in their own name, making their own choice about how much they contribute. The money in the fund is invested on the employee's behalf, and when they retire the fund is used to buy an annuity or an unsecured pension (or an alternatively secured pension if they are 75) which gives a regular income for life. Part of the fund may also be used to provide a tax-free lump sum.
How it works
We can help make sure you comply with the Government’s regulations for stakeholder pensions.
Common questions
Take a look at the answers to some frequently asked questions.
