Trustnet Direct Retirement Programme | Page 23

PLANNING Stakeholder pensions Stakeholder pension schemes are a type of defined contribution scheme. They offer a flexible way to build up retirement income benefits, while benefiting from tax advantages, whether you are employed, self-employed or not working. They are designed to be accessible to all, and have limits on the charges that can be imposed. Stakeholder pensions are individual contracts between you and the pension provider. The pension provider is often an insurance company or an investment platform, although it can also be a bank or building society. If you are employed, your employer can contribute to your stakeholder pension. Other people are also able to contribute, and you can contribute to other people’s. For example, you could contribute to a stakeholder pension belonging to your spouse, partner or even your child, to allow them to start building up retirement benefits from an early age. Since 2006, there has been no restriction on the number of different pension schemes that you can belong to, although there are limits on the total amount that can be contributed across all schemes each year if you are to receive tax relief on contributions. This means you can have a stakeholder pension to provide additional retirement benefits, even if you're a member of a workplace pension scheme. Stakeholder pensions are flexible and portable. If you change jobs, or stop working, you can continue contributing to the scheme, and, if you join a new employer, they may also decide to contribute to it. If you do change jobs, you should ensure the pension provider allows your contributions to continue (especially if your old employer was paying contributions on your behalf). You can access your stakeholder pension at 55 and withdraw 25 per cent of the sum tax-free. Key points These have died out to some extent, to be replaced by other types of pensions such as SIPPs (p24) or workplace pensions They are tax efficient and you can access your funds from age 55 Once you reach 55, 25 per cent of your pension is tax free Stakeholder pensions are flexible and portable Access at 55 Withdraw (tax-free) 25% Page 23