Pension Planning –Stakeholder Pensions  

From now on, Stakeholder Pension will form the backbone of most people’s pension planning. The rules have been relaxed allowing many more people to use a method of planning that has many similar benefits to the Personal Pension. 

Virtually everyone earning less than 30,000 per annum can have a Stakeholder Pension, even those not working or paying tax. 

Some of the main winners will be those who have to date only been able to make Additional Voluntary Contributions, either using a scheme offered by their employer or Free Standing AVCs. Now, using a Stakeholder Pension, your money will grow in a similar way, the key difference being your entitlement to Tax–Free Cash. In other words, instead of AVC funds only allowing the owner to purchase an income, the same level of contribution, fund growth and charges will yield valuable access to cash, at the owner’s discretion, anytime after their 50^th birthday. Good news indeed. 

Other key changes that offer valuable benefits include the option for non-earners to make pension contributions and receive basic rate tax relief, currently 22%. For example, housewives and mothers with young children who make an invaluable contribution to their family but who do not receive payment for their services, in the eyes of the Inland Revenue, can now also plan for their financial future, independent of their partner or the source of their income. A fair deal at least!

For those looking to the longer term, it is also now possible to make a pension contribution for a new baby!! With all the talk of youngsters not putting enough away for their old age, 3,600 invested now for a babe in arms would give them a pension fund at 60 of 150,000, assuming a modest growth rate of 6% per annum. Food for thought, Grampa? 

For more information on your options with regard to pension planning, please call us or get in touch us using the contact details above.