The Specifications on a Stakeholder Pension Fund
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Flexibility is inherent within this new regime, allowing people to transfer their stakeholder pension fund to another employer when they change employment, and the minimum contribution that providers must accept is £20. People are at liberty to contribute as much or as little as they wish, and also receive a mandate imposed by legislation that a provider is not to charge fees of more than 1.5% for the first 10 years of the stakeholder pension scheme, and afterward a reduction to 1%. If indeed the fund is already in existence and was established prior to 2006 the maximum fees chargeable remain at 1%.
With regards to all investment funds, the investor should be acquainted with occurrences in their fund’s growth as it takes shape, and it is advisable to monitor statements provided by the fund manager. Individuals are expected to negotiate the more practical terms of the fund with the provider, however a forecast of the expected growth of their fund is standard for industry practice, and proves useful in enabling the monitoring of the fund’s progress.
Unfortunately, even these incentive-based funds cannot guarantee returns for the investor, and since the decline in fund management performance from 2000 onwards, funds are capable of lack-luster periods of stagnant behaviour. Should this affect the health of your finances in a negative manner whether before or during retirement, this website may be able to offer help and advice.
While actively in control of their investment options, individuals contributing to a Stakeholder Pension fund have a practical safety net contrived specifically to assist the imminent retiree. This security exists in the form of a fund manager’s obligation to place funds in less risky investments five years prior to the investor’s retirement in order to preserve the capital growth that has accumulated thus far.. This practice is dubbed ‘life styling’ and can be expressly declined if that be the inclination of the retiree.
Proceeds from the fund are not accessible until the statutory age limit of 50 years (to be increased to 55 years by 2010) is reached, but depending on the provisions of the scheme, after reaching the age limit this freedom may be applied in various ways. When the age limit has been reached and the rules of the scheme allow, the individual may draw 25% of the proceeds as a lump sum if they wish, but are under no obligation to do so, as in many cases, this scheme will merely be supplementary to other retirement income. For further financial information, please click here.
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