RichB

worth thinking about?
I keep getting info through the door, is this something that we should be looking into, after all the one that sent me info gives away a free pen set worth £97 so they must be good.

carl

I haven't investigated them properly yet, but a good thing is that the charges are capped at 1%.

Tiggs

yep, so no one will sell them to you and so the "masses" wont ever get one- very clever!

Andrew Timmins

Our Stakeholder pension charge is only 0.9%. You don't get a pen though.

We also spend time giving people advice,if the want it, despite the very low charges on Stakeholder.

Andrew Timmins
Royal Liver Assurance

Kevin Greeley

Non-taxpayer: stakeholder is great, you get a tax credit even though you don't pay any tax. No age limits so you can start them for kids.
Standard rate taxpayer: ISAs could be better as you don't have to buy an annuity with your savings.
Higher rate taxpayer: pensions + ISAs (if possible) could be the way to go.

Trout...

Well.....

If you got to the FSA website you will see that the for many companies, i.e. Standard Life - for the same premium a traditional Personal Pension will give you a higher projected return over time than a Stakeholder of the same premium. In some cases the difference is significant.

All this crap about 1% charge being low is rubbish. It is based on the accumulated fund - so in the early years, yes it is cheap - but as the funds build it is 1% of the funds that is charged and when your fund is £200,000 say, then £2,000 charge a year does not seem so cheap - or low cost - or anything good really!

Taking 2% of premium may well be more attractive - which is why some personal pensions are likely to pay out more long term than a stakeholder.


WRT the comment about ISAs - well not in the short term. ISA sales last year went completely down the toilet, and this year it is much worse. ISAs have give very poor returns over the last couple of years - especially as most are based on equities which have had a rough time.

Ideally you should try something like corporate bonds and with profit bonds - safe, steady growth. You will see the big investment houses dumping equities over the next few years and shifting to bonds of various kinds - this will have the double whammy of creating a stronger bond market and weakening the equity markets. ISAs typically track the equity market and so cannot be seen to offer a good short to medium return.

If you have funds at present I would go for a with profits bond and high interest cash saving - or use your money to pay off your mortgage faster!

I think the only situation where a Stakeholder is a really good buy is for non-taxpayers, or the over 50s as you can cycle your money through for a year and then cash it in to buy another one and benefit from the tax relief immediately.

If you want more advice go the the Moneyxtra site, and check out www.fsa.gov.uk


Trout

johnfelstead

I have a stakeholder pension through my company. I pay 3% salary and the company pays 5% on top. On top of that i get a tax rebate as i pay higher rate tax.

It's still a personal pension though, just the company wanted to deal with one scheme.

I hadnt really twigged that the charges are 1% of the fund value and not 1% of the fees, thats quite important.

Of course most people arent aware that Labour have screwed my generation over big time by removing the tax exempt status of the funds for pensions. This change has made an absolutely masive drop in the retirement fund i will recieve and has made having a pension over a saving scheme a very unclear choice now.

This is without doubt the biggest single decision made by any goverment that will affect my generation in the future. Seems no one has really understood the implications yet, god help us in 30 years time when we see real pensioner poverty in the UK!

If my company didnt put the extra 5% in i would be reconsidering my current options.

Trout...

John,

Stakeholder pensions and personal pensions are different.

However small to medium companies are required by law to offer a stakeholder scheme - this was to cover a wide range of companies that offered no scheme at all. In your case it is the right thing as your employer is making a significant contribution.

You may want to consider seeing if you can contribute more than the current 3% to bolster your pension requirements for later.

At present the 'savings' gap in the UK is around £27bn - that is primarily a lack of pensions being funded.

If you project out thirty years on the current basis the pensions and healthcare costs come pretty close to the whole economic production of the UK as people live longer and the number of pensioners in the population rises to 1 in 3.

I wonder if we will all have 'vintage' Scoobs in our garages then - nostalific for the old days of real cars.

Trout

GM

A Stakeholder scheme is basically a Personal Pension Scheme with a few additional requirements - such as the 1%pa charge. They are both set up under the same legislation.

Any employer with 5 or more employees has to offer membership of a Stakeholder scheme to "relevant employees" - that means they have been employed for at least three months and earn more than £3744 pa. UNLESS - they employer contributes at least 3% into a personal pension scheme or allows them into an occupational scheme. There is no requirement for an employer to pay anything at all into the stakeholder scheme.

RichB

Cheers for the info guys, must admit the free money bit made me think BUT I had manage to not read the bit saying the fee being a percentage of the fund value

Andrew Timmins

When comparing ISA to Stakeholder remember that most ISAs have an initial charge of 3.5-5% and an annual charge of about 1.5%. So from a cost point of view Stakeholder is usually cheaper. Also with a pension £1 worth of investment costs just 78p for non and basic rate taxpayers and only 60p for higher rate taxpayers.

I find that a combination of the two is best if you can afford to make significant contributions. You then get to make use of your tax allowance in retirement and have a lump sum to either spend or generate a tax free income.

Kevin Greeley

Interesting reading here:

http://www.fool.co.uk/personalfinanc...etirement5.htm

"The Fool's Guide to Retirement Planning - Step 3: Pension, ISA or both"