Stakeholder Pensions can make you Gaga

Stakeholder Pensions were launched with television campaigns, press and media coverage with a promise of low cost flexible pensions. The aim was to encourage saving for retirement.

Originally, the charges on Stakeholder Pension's were capped at 1% per annum. Major providers jumped on the bandwagon to market stakeholder pensions, but soon found that they could not make money with the charges capped at 1%. After extensive lobbying with the government, the cap on charges was lifted to 1.5% per annum for the first ten years and then 1% p.a for the rest of the term of the policy.

The saving's GAP (the difference what should be saved as a nation and what s actually saved) is as big as ever and stakeholder has not had the effect the government wanted. Evidence of this is the introduction of Personal Accounts scheduled for 2012.

The recent annual survey by money management has shed some light on the costs of stakeholder pensions in comparison to other pension products.

The survey highlights that stakeholder pensions are not necessarily the cheapest.

Over a twenty five year regular premium contract, charges from a stakeholder pension (based on a 1.5% p.a charge for the first ten years) would take 15.8% of the fund compared to the lowest charged contract that deducts only 11.8%.

I have to ask myself "Do stakeholder pensions offer value for money?"

Well yes, if you are less than five years to retirement. However, if you are one of the millions far away from retirement than the answer is definitely no!

In short if you are recommended a stakeholder pension, please hold fire and contact us for more pensions advice or visit our website at Consilium Asset Management

Although not the cheapest alternative a Self Invested Personal Pension might help if you are looking to obtain a wide range of investments within your pension. It can also help you to buy commercial property as part of your pension fund.