A Solution in Stakeholder Pensions

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Some people, of course, have not had the ability to save and, while the State Pension requires qualification by the individual making regular contributions throughout their working life, a person who has been unable to do so for whatever circumstance is still offered a basic pension through the Pension Credit policy. Understandably, it may be difficult to save for retirement for a variety of reasons, for example, financial issues, credit card debt or bankruptcy.

Therefore, it can be seen that opportunities for people to supplement the return their pension will offer them in retirement have been made available. If the amount they anticipate to receive is not seen as adequate, schemes are able to be established in order to supplement this income.

A Stakeholder Pension is a privately funded pension and is available in addition to the State Pension or Pension Credit income. This pension fund permits both contributions and lump sums to be deposited by either the individual or their employer, and includes the appropriate tax concessions attached.

The fund is strictly regulated by government control in order to protect the individual from onerous fees and charges that erode capital growth, but regulation also insists that funds cannot be accessed until a minimum age of 50 years is reached, in acknowledgement of each individual’s responsibility toward their own future. By 2010, the minimum age will be extended to 55 years in consideration of the need to preserve pension fund proceeds.

Again, the actual investment decisions and the conditions upon which the fund is allowed to operate are negotiated by the individual; however, rigorous requirements are imposed upon any provider of Stakeholder Pension funds, with employers of an agreed certain size being obligated to offer stakeholder pension schemes to staff.

In order to encourage people to participate in their own retirement funding, extensive taxation incentives are afforded the potential contributor to a Stakeholder Pension scheme.

Normally, this means that all contributions to a stakeholder pension are deemed to be tax-free income, however indicative of the need for people to save for their own future is the government undertaking that Her Majesty’s Revenue & Customs will match deposits made, by the contribution of 28% of an individual’s personal contributions into their Stakeholder Pension fund.

Should an employer employ five or more members of staff, there are obligated to provide a stakeholder pension scheme for their employees. They are able to deduct contributions from an employee’s salary or wages and deposit them directly into their fund. Additionally, the employer will be offered tax incentives to encourage the matching of contributions made by an employee, and these will also accumulate in the fund adding considerably to its capital growth. For further information on your finances both before and during retirement, this website may help.

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