Stakeholder

Stakeholder Pension Schemes

A Stakeholder Pension (SHP) is a type of Personal Pension Plan designed to provide an optional lump sum and income in retirement. In common with a Personal Pension Plan, Stakeholder Pensions are available to any United Kingdom resident under the age of 75. The minimum age to access benefits in a Stakeholder Pension is 55 (57 from April 2028).

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You are more than welcome to discuss your pension requirements with Peter or another of our pension advisers, at a free introductory meeting.

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You, in conjunction with your adviser, choose the pension provider and make the arrangements for paying the contributions to the plan.

You can start a SHP even if you have a workplace pension or if you’re self-employed and don’t have a workplace pension. You don’t have to be working to take out a SHP and you can also provide a SHP for your spouse/partner or your child/children.

When you contribute to a SHP, your money is invested by the pension provider (usually an insurance company) to build up a fund/pension pot over a number of years.

You do not need to retire to draw your stakeholder pension benefits. You can take benefits from age 55 (57 from April 2028).

At retirement, the option exists to take a quarter of the fund, capped at £268,275, as a tax-free amount.

We can offer tax-efficient planning so you can minimise taxes on your retirement income and investments.

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The key point about SHPs, as with any other pension, is to start contributing as early as possible and keep making contributions for as long as possible. That way your pension pot has time to build up and the investment returns compound through reinvestment over many years. The result should be a significant sum of money to invest when you retire.

If you die before age 75 and you have not started to take benefits from your pension the funds will normally be passed to your spouse or other elected beneficiary free of inheritance tax. Other tax charges may apply depending on the circumstances.

It is possible to continue past age 75 without taking benefits. If you die after age 75 your pension pot can still be passed to a nominated beneficiary free of inheritance tax. However, if paid as a lump sum, tax at the beneficiary’s marginal rate will apply (2024/2025). If it is paid as an income to your spouse or dependant there will be no initial tax charge, but any income paid would be subject to income tax.