Stakeholder pension scheme
- Stakeholder pension scheme
Stakeholder pension schemes were introduced in the UK in 2001 to encourage more long term saving for retirement, particularly among those on low to moderate earnings. They are required to meet a number of conditions set out in legislation, including a cap on charges, low minimum contributions, and flexibility in relation to stopping and starting contributions. Employers with 5 or more employees are required to provide access to a stakeholder pension scheme for their employees unless they offer a suitable alternative pension scheme. The features of stakeholder pensions were intended to make them cheaper to sell than existing personal pensions and to provide a more transparent and attractive saving vehicle.
Although many stakeholder pensions have been taken out, they have largely not been successful in encouraging lower earners to save more. The government announced in May 2006 that it proposed to introduce a new pension scheme called Personal Accounts. It seems likely that personal accounts will take over the intended role of stakeholder pension schemes.
Conditions
All stakeholder pension schemes must be registered with The Pensions Regulator.
Like personal pension schemes - stakeholder pensions must provide an income in retirement using a minimum of 75% of the fund. Up to 25% of the fund can be taken as a tax free lump sum.
Originally the maximum annual charge was 1% of the fund value each year. Since 2005 this has increased to 1.5% of the fund value for each year until the 10th year and 1% thereafter.
There can be no penalty on exit or entrance to the scheme, and the minimum contribution is £20 per month. However, payments can be stopped at any time and a single contribution of £20 is enough to open a plan.
Benefits can be taken from age 50 (rising to 55 in 2010) and must be taken by age 75.
Income can be provided via a secured pension (annuity), unsecured pension (income withdrawal/drawdown) or from age 75 an alternatively secured pension.
See also
* Pensions
* Personal pension schemes
External links
* [http://www.thepensionservice.gov.uk/atoz/atozdetailed/stakeholder.asp DWP - Stakeholder pensions]
* [http://www.hmrc.gov.uk/stakepension/ HM Revenue & Customs - Stakeholder pensions]
* [http://www.moneymadeclear.fsa.gov.uk/products/pensions/types/products_stakeholder_pensions.html FSA - Stakeholder pensions]
* [http://www.is4profit.com/business-advice/finance-money/stakeholder-pensions.html Stakeholder Pension Guide]
Wikimedia Foundation.
2010.
Look at other dictionaries:
stakeholder pension scheme — In the UK, a type of low cost pension available from April 2001. Employers with five or more employees have to make a stakeholder pension available to their staff. Stakeholder pensions are bought from authorized financial institutions, such as… … Accounting dictionary
stakeholder pension scheme — In the UK, a type of low cost pension available since April 2001. Employers with five or more employees have to make a stakeholder pension available to their staff. Stakeholder pensions are bought from authorized financial institutions, such as… … Big dictionary of business and management
stakeholder pension — A money purchase scheme designed to provide retirement benefits, mainly for employees or the self employed. It must be registered with the Pensions Regulator. If an employer with five or more employees does not provide an occupational pension… … Law dictionary
stakeholder pension — ➔ pension1 * * * stakeholder pension UK US noun [C] FINANCE, HR ► in the UK, a type of personal pension plan introduced in 2001 into which people can make regular payments that are invested to provide them with a pension: »If you employ 5 or more … Financial and business terms
pension scheme — Any arrangement the main purpose of which is to provide a defined class of individuals (called members of the scheme) with pensions. A pension scheme may include benefits other than a pension and may provide a pension for dependants of deceased… … Accounting dictionary
stakeholder pension — noun A type of pension arranged as part of a private scheme complying to certain requirements established by the government • • • Main Entry: ↑stake * * * stakeholder pension UK US noun [countable] [singular stakeholder pension … Useful english dictionary
stakeholder pension — stakeholder pensions N COUNT In Britain, a stakeholder pension is a flexible pension scheme with low charges. Both employees and the state contribute to the scheme, which is optional, and is in addition to the basic state pension. [BUSINESS] New… … English dictionary
personal pension scheme — An arrangement in which an individual contributes part of his or her salary to a pension provider, such as an insurance company or a bank. The pension provider invests the funds so that at retirement a lump sum is available to the pensioner. This … Big dictionary of business and management
personal pension scheme — An arrangement in which an individual contributes part of his or her salary to a pension provider, such as an insurance company or a bank. The pension provider invests the funds so that at retirement a lump sum is available to the pensioner. This … Accounting dictionary
stakeholder pension — n a type of private pension scheme (= a system where people at work pay money regularly into a fund so that they will receive an income when they retire) introduced in Britain in 2001 which must meet certain standards set by the government. A… … Universalium
