Pension questions

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.

What is a pension?

A pension is a tax-efficient way of saving for your retirement. You can choose the pension provider you save with, how much you contribute and the funds you invest in. You get tax relief on the amount you put into your pension plan, subject to certain limits.

Personal pensions allow you (and any current or future employer) to make contributions even if you're a member of other pension schemes. You can stop, start, increase or decrease your contributions whenever you like.

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.

The State Pension is a regular income you may be entitled to receive from the Government when you reach State Pension age. The amount you receive will depend on certain factors, including the number of years you've made National Insurance contributions and the date you reach the State Pension age. The State Pension age is regularly reviewed by the Government. You can find out more about the State Pension at: gov.uk/state-pension

We offer the following pension products that may suit your individual needs:

  • Stakeholder Pension - a straightforward pension that you can apply for online. The rest of the questions and answers on this page are about our Stakeholder Pension.

  • Portfolio Plus Pension - has a wider range of investment funds to choose from and the ability to start self-investment in the future, as well as the flexibility to start Flexi-Access Drawdown from age 55. This pension plan is only available through a financial adviser.

If you don't have a financial adviser, you can find one in your local area online at unbiased.co.uk.

The rest of the questions and answers on this page are about the Legal & General Stakeholder Pension Plan.

How much can I pay into a Stakeholder pension?

Stakeholder pensions are very flexible.

  • You can pay in as little as £20 gross, which includes the basic rate tax relief paid by
    HM Revenue & Customs (HMRC).
  • You can pay contributions on a regular basis or make occasional lump sum payments.
  • You can stop, start, increase and decrease your payments as well as pay in lump sums without penalty.
  • You can transfer pension pots into your plan from other UK Registered Pension Schemes or from some overseas pension schemes.

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

Please refer to the  PDF file: Stakeholder Pension Plan Key Features PDF size: 373KB  for more information.

The law and tax rates may change in the future and the value of tax relief will depend on individual circumstances.

What are my options at retirement with a Stakeholder pension?

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, including 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 lump 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 the remainder of your pot to buy a retirement income, which will be subject to income tax. 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. You can buy a pension annuity from us or from another provider.
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 here.

Who can have a Stakeholder pension?

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.

How do I apply for a Stakeholder pension?

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. If you're unsure, you may want to talk to a financial adviser. Visit unbiased.co.uk to find one in your local area.

How will I know if I’m paying enough into my Stakeholder pension?

Our contributions calculator can help you work out how much income your pension contributions might give you when you access your pension pot.

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 accessing your pension pot.

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.

What are the charges for a Stakeholder pension?

  • The Government has a maximum permitted annual management charge for Stakeholder pensions, which is currently 1.5% a year of the value of your pension pot for the first 10 years of your pension plan, and 1% a year after that. Please see our Stakeholder Pension page for full details.
  • 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 PDF file: Stakeholder Pension Plan Key Features PDF size: 373KB   for more information.

Where can I invest my Stakeholder pension?

We have a wide range of funds, some managed by us and others managed by specially selected external fund managers.

We also offer an investment option called a lifestyle profile. This is where your contributions are initially invested in funds for the potential of long-term growth. Your pension pot is then gradually switched into funds that we consider to be lower risk as you get nearer to your chosen retirement date. 

Visit our Stakeholder Investment Choices page to find out more.

How do I choose my Stakeholder pension fund(s)?

You can find out more about the funds and lifestyle profiles we offer on our Stakeholder Investment Choices  page. This includes regularly updated funds factsheets to all the funds available.

You should also read the PDF file: Stakeholder Pension Plan Key Features PDF size: 373KB   and the PDF file: Choosing your investment fund W13814 PDF size: 564KB  brochure.

If you’re still unsure which funds to choose, you may want to talk to a financial adviser. Visit unbiased.co.uk  to find one in your local area.

If you don't choose, we'll automatically invest your contributions into our default option - our Multi-Asset Lifestyle Profile.This initially invests in our Multi-Asset Fund. Then, as you approach your selected retirement date, we’ll gradually switch your investment into our Over 15 Year Gilts Index Fund and the Cash Fund which we consider to be lower risk funds.

What are the potential investment risks of a Stakeholder pension?

All investments carry an element of risk. Some of the risks are listed below. Please read the  PDF file: Stakeholder Pension Plan Key Features PDF size: 373KB  for further information.

The value of your investments can fall as well as rise, so the value of your pension pot is not guaranteed. It is particularly important to remember this if you’re close to accessing 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 at that time.

The fund or funds you choose to invest in will have specific risks. These risks are described in the  PDF file: Choosing your investment fund W13814 PDF size: 564KB .

How do I transfer the value of any other pension(s) I might have into my Stakeholder pension?

Before you decide to transfer from another pension plan we recommend you get financial advice.

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 Pension Plan you can contact a financial adviser. Visit unbiased.co.uk to find one in your local area.

How could my family benefit from a Stakeholder pension?

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). If they are working, you may be able to contribute up to 100% of their earnings. This means they will have their own pension income when they access their pension pot.

You could also start a Stakeholder pension plan for your children or grandchildren. Investing in our Stakeholder Pension 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 contributions calculator for children.

Can I manage my Stakeholder pension online?

You can manage your plan online by registering for My Account.

My Account lets you view the current value of your pension pot. You can also switch the funds you're invested in, change the amount or regularity of your contributions, and the date you intend to access your pension pot.

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