Stakeholder Pension Transfer? 

Is a Stakeholder Pension Transfer possible? This is a question we are getting asked more and more at Harrison Brook. With pensions being at the height of current affairs, everything from a QROPS to a SIPP being discussed, it is important to define exactly what a Stakeholder pension is.

Stakeholder pensions are a type of defined contribution personal pension. They have flexible and low minimum contributions designed to help those who cannot afford to contribute large sums of money for retirement. Some employers offer one but you can start one yourself. You contribute money on a monthly basis which is invested and upon retirement, you receive payments back based upon how that investment has done.

All stakeholder pensions must fit the following minimum standards criteria;

• Limited charges – 1.5% per annum or below
• Low minimum contributions – from £20 per month
• Penalty-free transfer of your funds to a different pension plan of your choice
• A default investment fund – a fund for your money to be invested in should you not want to choose
• Ability to change contributions

As you contribute your money is invested in stocks and shares and other investments – the key objective is to grow your hard earned cash leading up to retirement. There are normally an array of funds to be invested in and these investments can go both up and down. For more information on investing for your future speak to a qualified independent financial adviser 

The amount you will get from your pension will depend on a number of different factors;

• How much did you contribute in total
• How long was each contribution invested
• Capital growth – how the investment of your contributions has done
• Cost of fees and charges

Key factors when considering transferring a stakeholder pension!

• Loss of guaranteed annuity rates (GARS) : There are potential extras within your current pension plan such as a generous annuity rate, which you could lose with a Stakeholder Pension Transfer.
• Investment performance: What is the historic performance of the new provider? Is it better, worse or the same as your current? How much choice is there? Stakeholder pensions rarely vary much in terms of what they offer so it really comes down to the performance the funds themselves.
• Charges: As previously mentioned all annual management charges (AMC)are capped at 1.5%.  However, it is a possible that you are currently on a 1% AMC and the new provider is at 1.5%, so it is always worth checking.
• Retirement age: How soon are you looking to retire? If you are already in your early 60’s and planning to retire at 65, there is very little point in transferring. Mainly due to not enough time to gain an advantage on switching to a better performing fund.

So, should I transfer my stakeholder pension?

There are a number of factors to consider when considering a Stakeholder Pension Transfer, it is a not a decision that should be taken lightly and it is always worth speaking to a fully qualified independent financial adviser.

UK pension transfers is now a huge market with and with new legislation being brought out almost yearly getting the right advice is more important than ever.  Talk to a Harrison Brook Financial Adviser to make sure you choose the most appropriate jurisdiction and provider for your needs.

Take the first step and get started!

To get the latest valuations of your pensions and to discuss a UK Pension Transfer with a UK and international regulated adviser, Click Get Started Now! 

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