Although it is a type of personal pension, a stakeholder pension is much different from other of its type. It needs to meet some necessary minimum standards in accordance to the law. These are to make sure that they offer flexibility, security, and value to your money.
And the following standards that a stakeholder pension should meet are firstly, Flexibility. It should be flexible enough that you:
- Can change, stop or re-start your payments whenever you desire. And there should be no penalty if you do so.
- Can start payments for as low as £20. And these could be given even at less regular intervals, not just weekly, monthly, etc.
- Can switch to different providers without being charge of any when doing so.
Next is Security. It should be secured enough that it is managed by an approved stakeholder manager or trustees. They have the responsibility to ensure that the said scheme has accomplished all necessary legal requirements.
And lastly is Limit on annual management charges. It should be that for the first ten years that you hold the scheme, managers should charge fees of up to one and a half per cent of your pension fund. And for the following years, it should be up to one per cent.