To have a Stakeholder pension plan, you must be under 75 and normally a resident of the UK or a Crown servant or the spouse or registered civil partner of a Crown servant.

In most cases, you can pay into a Stakeholder pension if you are:

• employed,
• a fixed contract worker,
• self employed,
• not working or taking a career break. (So someone who stays at home to look after their children, for example, can have one.)

You can also open a Stakeholder on behalf of a child. See How could my family benefit from a Stakeholder pension?

Stakeholder pension plans, like other pension plans, are highly tax efficient. Here's how:

• You will normally receive tax relief on the money you pay into your pension plan (called 'contributions'). So, for every £80 you put into your Stakeholder pension plan, HM Revenue & Customs (HMRC) will pay in an additional £20, even if you don't pay tax at all. These figures assume basic rate tax is 20%.
• If you are a higher rate tax payer, you can claim any additional tax relief through your self-assessment tax return.
• Any growth in your Stakeholder pension fund is free of UK income tax and capital gains tax. However, Legal & General cannot reclaim the tax paid on dividends from UK companies.
• The law and tax rates may change in the future, and the value of tax relief depends on the circumstances of the individual investor.

Stakeholder pension plans are very flexible.

• You can pay in as little as £20 gross (which includes the tax relief paid by HM Revenue & Customs).
• You can pay in contributions on a regular basis or make occasional lump sum payments.
• You can stop or start payments without penalty.
• You can currently move your Legal & General Stakeholder pension fund to another Stakeholder provider without any penalty imposed by Legal & General.
• You don't have to be working and getting any earned income to pay up to £3,600 gross each tax year into your Stakeholder pension plan.

There are certain limits on how much you can pay in and get tax relief on:

• You can make gross contributions of up to 100% of your relevant UK earnings or £3,600 if that is greater, in each tax year, and still get full tax relief. The law and tax rates may change in the future and the value of tax relief will depend on your individual circumstances.
• If total contributions paid by you or on your behalf exceed an amount known as the Annual Allowance (£245,000 in the 2009/2010 tax year) then HM Revenue & Customs will impose a tax charge of 40% on the excess contribution. However, contributions paid to a pension plan in the tax year in which you take all your benefits under the plan do not count towards the Annual Allowance.
• Even if you already pay into an occupational pension scheme, you may also have a Stakeholder pension plan.

'Relevant UK earnings' means all of the earnings that count towards the amount that you can contribute to a personal pension. This includes your salary, bonuses, tips, overtime and benefits in kind. In fact, most sources of income that are taxable. The main exclusions to this are income from pensions, State benefits, and certain controlling director payments.

All Stakeholder pension providers are obliged to send you an annual statement telling you what you have paid in and how your pension fund is growing. You should read this statement carefully.

It's wise to review regularly how much you are putting into any pension plan. Many people choose to gradually increase their contributions as they can afford to and as their earnings rise. The value of the units which make up your pension fund can go down as well as up, so the value of your pension fund is not guaranteed. It is particularly important to remember this if you are close to taking your pension benefits. Please remember your money is tied up until you take your benefits.

To help you estimate how much retirement income your pension contributions might give you, use our online contributions calculator.

When you take your benefits you can normally take up to 25% of your pension fund as a tax-free cash sum and use your remaining pension fund to buy a regular income for the rest of your life. This income is provided by a pension annuity and will be taxable. There are different types of pension annuity and they have many options to suit different needs. You can buy a pension annuity from us or from another provider. Buying a pension annuity with another provider is called taking the Open Market Option. By shopping around you might get a better income. You can read more about the annuities we offer on this website. We’ll send you full information about your choices at retirement as you near your chosen retirement date.

How much you get back from your Stakeholder pension will depend on a number of things which will include how much you contribute, charges, investment returns over the period your contributions are invested for, your age and the financial market conditions when you take your benefits.

Use our online contributions calculator to see what your contributions might be worth over time.