Stakeholder Pension Schemes

Stakeholder pensions, introduced in April 2001, are a type of personal pension plan with statutory minimum standards, targeted at individuals on moderate incomes. They are a flexible money-purchase arrangement with capped management charges, and enable employees to continue making contributions to the scheme if they change jobs. Stakeholder schemes are set up to accept low-value and irregular payments; they cannot make any charges for missed contributions.

Employers with 5 or more employees are required to designate a stakeholder pension scheme if they do not offer them access to a good value occupational pension arrangement. The employer does not have to contribute, although if they do, they will receive tax relief on those contributions.

One of the main advantages of this type of scheme for an employer is that the scheme provider is responsible for the administration of the scheme, not the employer.