Retirement Planning - Stakeholder Pensions

Make A Stake In Your Future

One big criticism of pensions in the past is that they were unnecessarily complicated and full of technical jargon, however things have changed.

Stakeholder Pensions were introduced by the Government in April 2001. They are designed to be a low cost, simple way for everyone to save for retirement. As well as providing for your retirement one of the major attractions is the tax relief you receive upon the contributions you make.

As a result of introducing Stakeholder Pensions, the Government have :

- widened eligibility rules
- imposed a capped charging structure
- introduced the requirement for employers of 5 or more staff to ensure their employee's have access to a pension scheme.

Stakeholder Pensions are intended to encourage people to start saving for their retirement, it is also viewed as a valuable staff benefit by existing and potential employees.

Eligibility Rules
- You can contribute on behalf of your children up to £3,600* gross per year
- You can pay up to 100% of you earnings into a pension (maximum of £255,000*)
- If you earn less than £3,600* per year you can still contribute up to £3,600* regardless of income
- The maximum lifetime allowance is currently £1,800,000*

Tax Relief Examples
- Example 1: If a 20% tax payer pays £100 into a personal pension - £125 will be invested
- Example 2: If a 40% tax payer pays £100 into a personal pension - £125 will be invested, but they will be able to claim an additional 20% tax relief via self assessment meaning a 'true' cost of £75.

* Tax information given is based on the 2010/11 tax year, and may be subject to change in the future.

THE VALUE OF A PENSION IS NOT GUARANTEED AND CAN GO UP AND DOWN DEPENDING ON INVESTMENT PERFORMANCE. YOU COULD GET BACK LESS THAN YOU'VE PAID IN

Partners: Kenneth Harrington & Katherine Harrington
Harrington & Horne Financial Services are Independent Financial Advisers which are directly authorised and regulated by the Financial Services Authority
Head Office: 31 Southdown Avenue, London W7 2AG