Stakeholder Pensions


War Hero
Hi F_S,

What is, in laymans terms a Stake Holder pension?  I have 5 yrs left before I go and park cars and am unsure how a StakeHolder Pension may benefit my Army pension.


Good question.  Stakeholder pensions are getting quite a bit of profile right now.  

Stakeholders are cheap and simple pension plans with government-imposed maximum charges and minimum standards. They have no initial charges and annual charges are capped at 1% which is very low compared to traditional private pensions which have initial charges of 5-10% and annual charges of 1-3%.

You can make payments from just £20 per month and stop and start them at will. You can transfer between providers at no cost.

Stakeholders are aimed at the 40% of workers who earn between £10,000-£20,000 a year but because they are on contract or self-employed, or work in small companies, are not offered a company scheme.

You can make payments of up to £3,600 a year (£300 per month) into a stakeholder and earn full tax relief on all the money. This means the government is giving you a 22% or 40% bonus depending on your tax band.

You could take out a stakeholder scheme to supplement your existing pension but DO NOT, repeat DO NOT give up or switch from your army pension, which will far outweigh any benefits that an individual stakeholder pension will give you.

Armed forces pensions are known to be very good and so they are almost impossible to 'top up' wihtout over-funding and creating 'stagnant' pools of cash which is not working for you.   A stakeholder pension or other tax-free investment like an ISA can help.

I hope this helps.  If you would like more detail, let me know.


War Hero
Dear F_S,

Thank you so much for you reply.  So to keep it simple, if I pay 20-30 quid a month into the MOD Stake Holder Pension Scheme run by Scottish Widows, would I basically stop paying when I leave the Army and get a few extra quid when I am 65, or can I cash it in along with my lump sum that I plan to sink into a monster world cruise?
In essence, yes.  But have a chat with the Scot Wids guys for the details.  They are pretty well respected by financial press etc. so should look after you.  Any probs, tell them you are mates with a top finance hackette!

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