When the government introduced the SHP, the idea was that they should be accessible to all whether you’re employed, self-employed or not working. And, value for money is assured as the charges are capped, which is always good to know!
Stakeholder pension principles
How is a stakeholder different to other pensions?
Actually, they’re very similar to personal pensions. The main differences are:
Just like your car, a pension gets older and newer models come along with more shiny bells and whistles. In the case of SHP employers had to provide access to a pension for their employees but unlike auto-enrolment they weren’t required to pay into it. So, they’re a bit redundant now albeit they can still offer a good return and some of the terms shown above aren’t always available with new pensions.
What’s the future for stakeholder plans?
There are thousands of empty “shell” SHP schemes which were set up by employers and as they weren’t required to contribute to them very few employees joined. When auto-enrolment came along, and employers had to put you in a pension and pay in, the providers came up with shiny new pension plans. And, other low cost, high volume providers like NEST launched new products so the dear old stakeholder pension has very much been left on the shelf.