Thinking of starting a pension? We know that understanding how pensions work can be confusing. This page aims to answer some of the questions you’ll have, as well as giving you the reasons why you should consider starting to save for your retirement today.
A pension is a tax-efficient way of saving for your retirement. You can choose the pension provider, how much you contribute and the funds you invest into.
Some employers offer company pensions for their employees. They're sometimes referred to as occupational or workplace pensions, and usually involve employers putting money into your pension pot when you do. Company pensions vary between employers, and they will generally choose the pension provider for you. It makes sense to join your company pension if your employer is contributing. You should check how much you are expected to pay in and what your employer may pay in on your behalf.
When you reach State Pension age, the UK Government may provide you with a regular income. By 2018, the age will be 65 for men and women. From December 2018 the State Pension age for everyone will start to increase, reaching age 66 by October 2020.
The amount of State Pension you'll get will depend on the number of years in which you've made National Insurance contributions. You may also be eligible for an Additional State Pension if you reach State Pension age before 6 April 2016. Find out more about the State Pension and Additional State Pension at www.gov.uk.
We offer the following pension products to suit your individual needs:
If you don't have a financial adviser, you can find one in your local area online at www.unbiased.co.uk.
Stakeholder pensions are very flexible.
There are certain limits on how much you can pay in and get tax relief on. Your contributions before basic rate tax relief is added are net contributions. Your contributions after basic rate tax relief is added are gross contributions. Up to age 75, if you have no earnings, or earn up to £3,600 in a tax year, you can contribute £2,880 net across all your pension schemes and get tax relief of £720, giving you a gross contribution of £3,600.
If you earn more than £3,600 in a tax year, you can get tax relief on 100% of the earnings you contribute up to the Annual Allowance, which is currently £40,000 gross. In certain circumstances the Annual Allowance is reduced to £10,000.
If you’re a higher or additional rate taxpayer, you can reclaim any further tax relief through your yearly tax return. Tax relief doesn’t apply to employer contributions, transfer payments or any contributions after age 75.
There are no restrictions on the value of the total benefits payable from all your UK Registered Pension Schemes. However, HMRC will tax any benefits over your Lifetime Allowance at up to 55%.
The law and tax rates may change in the future and the value of tax relief will depend on your individual circumstances.
You can normally take money from your pension pot between ages 55 and 99. The size of your Stakeholder pension pot will depend on a number of things, which will include how much you contribute, charges and investment returns over the period your contributions are invested.
If you want to stay invested in your plan you can take a maximum of two withdrawals in any calendar year and each payment must be a minimum of £5,000. This is subject to £5,000 remaining invested in your pension pot. Of each payment taken the first 25% will be tax free and the remaining 75% will be subject to income tax.
Or you can take your full pension pot as a cash sum. The first 25% will be tax free and the remaining 75% will be subject to income tax.
Or you can take up to 25% of your pension pot as a tax-free cash lump sum and use your pension pot to buy a retirement income. This can be either for a fixed period of time or for the rest of your life. This is known as buying a pension annuity. This income will be taxable. You can buy a pension annuity from us or from another provider. You can read more about our annuities here.
There is now greater flexibility on the way that you can access money from your pension pot. These options are explained in the Stakeholder Product Options summary.
To have a Stakeholder pension with us, you must be under age 74 and normally a resident of the UK or a Crown servant or the spouse or registered civil partner of a Crown servant. You can start a Stakeholder pension even if you are already a member of an occupational (company) pension scheme. You can also open a Stakeholder pension on behalf of a child. See 'How could my family benefit from a Stakeholder pension?' below.
You can apply for a Stakeholder pension online but before you do, you must read the following documents. If you don't understand any point, please do not hesitate to contact us for further information.
You can print them and keep for future reference. We also recommend that you read the Money Advice Service website. This will help you make sure that a Stakeholder pension is right for you.
On this website, we're not seeking to give you advice. It's up to you to decide if this Stakeholder pension is suitable for you. If you're unsure, contact us for more information.
Our contributions calculator can help you work out how much income your pension contributions might give you when you take your benefits.
It's wise to regularly review how much you’re putting into any pension plan. You can choose to gradually increase your contributions as and when you can afford to, and as your earnings rise.
The value of your pension pot may fall as well as rise.
It’s particularly important to remember this if you’re close to taking your pension benefits. You also need to remember that your money is tied up until you take your benefits.
Once your pension plan is up and running with us we’ll send you an annual statement on the anniversary of your plan. This will tell you how much you’ve paid in during the last year and the current value of your pension pot. You should read this statement carefully.
You may benefit from lower charges when you apply for our Stakeholder pension online. If you apply online through this website the temporary annual management charge, which normally applies to funds of £15,000 and under, won't apply.
Please refer to the Stakeholder key features (PDF: 154KB) for more information.
There are several options available to help you choose your pension fund/s.
If you’re not sure or can’t decide right away, we’ll automatically invest your payments in our Multi-Asset Lifestyle Profile. Your payments will initially be invested in our
Multi-Asset Fund. Then, as you approach your selected retirement date, we’ll gradually switch your investment into our Over 15 Year Gilt Index Fund and the Cash Fund, which we consider to be lower risk funds.
If you want to understand more about funds and Lifestyle Profiles take a look at our Funds made clear page. Then you can decide whether to choose a selection of funds or one of our Lifestyle Profiles.
If you’re confident choosing your own funds, you can review the fund information and factsheets on our Pension fund choices page.
You should also read the Stakeholder key features (PDF: 154KB) and the Choosing your investment fund (PDF: 166KB) brochure. If you're still unsure which funds to choose, you may want to talk to a financial adviser. Visit www.unbiased.co.uk to find your local adviser.
All investments carry an element of risk. Some of the risks are listed below. Please read the Stakeholder key features (PDF: 154KB) for further information.
You need to consider that the value of the units, which make up your fund, can fall as well as rise. This is especially important when you’re close to your chosen retirement date and may want to take less risk on the value of your pension pot.
The amount of pension income provided by your pension pot will depend on several things. These include charges, investment returns and, if you choose to buy an annuity, the annuity rates available to buy your pension income when you decide to take your benefits.
The fund or funds you choose to invest in will have specific risks. These risks are described in the Choosing your investment fund (PDF: 166KB) .
Before you decide to transfer from another pension plan we'd recommend you get financial advice first.
You need to consider if a transfer is to your advantage, so you need to look at several factors such as charges, investment choices and any guarantees that may be lost.
If you’re looking for advice on transferring a pension pot into your existing
Legal & General Stakeholder plan you can contact a financial adviser. A financial adviser is a person who is not tied to any one financial institution and is qualified to give financial advice on life insurance, pensions, investments and other financial products. Visit www.unbiased.co.uk to find your local adviser.
You may be able to pay up to £3,600 gross each tax year into a Stakeholder pension plan for your partner (regardless of whether they are working). This means they will have their own pension income when they take their benefits.
You could also start a Stakeholder pension plan for your children or grandchildren. Investing in one of our Stakeholder pensions on behalf of a child is a great way to help provide for your child’s future.
You can see how much your child's pension plan could be worth at retirement age by using our Stakeholder calculator for children.