Stakeholder pension for children - the detail.

This page explains the investment options, risks and charges currently associated with our Stakeholder pension plan.

If you would like to find out further information on our Stakeholder pensions then you should read the key features document.

Read about:

Your investment options

The charges

The risks

Your investment options

1. Choose an investment fund, or funds, to suit you

We offer a wide range of pension investment funds with varying levels of risk and potential reward.

You can choose to invest your contributions into one or more funds according to your attitude to investment risk. You can switch your investment from one fund to another, whenever you choose, free of charge.

• We offer over 20 pension investment funds, ranging from index-tracking funds (which track the performance of a market or geographical region) to actively managed investment funds (where a fund manager decides what to invest in, in order to best achieve the fund's aims).
• Alternatively, there are 17 funds from a set of specially selected external fund managers.

You can find out more information about our pensions investment funds, from our ‘fund types’ page.

2. Choose a Lifestyle Profile

You also have the option of a Lifestyle Profile. This is where your contributions are initially invested in funds for the potential of long term growth and then the investment is steadily switched into lower risk funds as your child get nearer to their chosen retirement date.

3. Take the default option

If you prefer not to choose a pension investment fund, your contributions will be invested into our default investment option - the UK Equity Index Lifestyle Profile. This means your contributions will initially be invested in the UK Equity Index Fund then, starting 10 years before your child's chosen retirement date, the investment will be gradually switched to the lower risk fixed interest and cash funds.We recommend that you read the leaflet Choosing your investment fund.

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The charges

The total annual management charge will not exceed the Government's maximum permitted charge for Stakeholder Schemes, which is currently 1.5% a year of the value of the fund for the first 10 years of your child's plan, and 1% a year thereafter. We can increase our charges but we will let you know at least 30 days before we make any change.

Compared with this, our charges for online applications provide great value for money. The basic annual management charge is tiered according to the value of your fund.

As your fund grows the rate of charge decreases.

For example, if the investment in our funds is worth £40,000 throughout the year, the basic annual management charge would be £385.

This is calculated as follows (£25,000 x 1.0%) + (£15,000 x 0.9%), which is £250 + £135 = £385.

If you decide to invest in any externally managed investment funds, an additional annual management charge (currently 0.15% a year) will apply to the investment in those funds only.

You can of course apply on a paper application form if you wish. However, an additional annual management charge will apply until the fund value of your child's plan first reaches £15,000 at the start of a plan month or until the plan has been running for 10 years, whichever is the sooner. Full details can be found in your paper application pack, which you can request using the contact us section on the right-hand menu.

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Risks

All investments carry an element of risk. Some of the risks are listed below. Please read the key features document for further information.

The value of the investments that make up your child's pension fund can go down as well as up, so the value of the pension fund is not guaranteed. Please remember that the money is tied up until your child takes their benefits.

The amount of pension income provided by your child's pension fund will depend on a number of things, including the amount paid into the pension fund, charges, investment returns and the rates available to buy their pension income when they decide to take their benefits.

The fund or funds you choose to invest in will have specific risks. These risks are described in the Choosing your investment fund document.

If you decide to cancel within the 30-day cancellation period, any refund may reflect a reduction in investment values. You can read more about Your right to change your mind at the start of our online application form.

Charges can change. Please see The charges section for more information.The law and tax rates may change in the future and the value of tax relief will depend on your child's individual circumstances.

You should be aware that joining a pension scheme may not be suitable, particularly if small amounts of savings may affect the entitlement to any means tested State benefits.