More Flexiblity Needed for Accessing Stakeholder Pensions

Written by Karen Bryan

Scottish Money CalculationsI’ve been investigating the best options for my stakeholder pension. I’ve been prompted into action by the fact that I’ll be able to access my stakeholder pension once I’m 55 next April. I came to the conclusion that I’d like to withdraw the maximum tax free lump sum of 25% of the value of my pension pot at the age of 55 and leave the remaining 75% invested to buy an annuity at some point in the future.

Guess what, according to my stakeholder pension provider, my desired course of action isn’t doable within a stakeholder pension. If I take the 25% lump sum at 55, I am forced to buy an annuity at the same time. I really can’t understand why: it seems a perfectly straightforward course of action.

However, if I want to take the lump sum at 55 and annuitise later, it looks as though I’ll have to shift my pension pot to a Self Invested Pension Plan (SIPP) which may higher charges than the 0.8% I am currently paying on my stakeholder pension.

Now a SIPP does gives you a wider choice of investments options. However I find it hard enough to select which fund(s) to use for my stakeholder pension pot but I am looking into holding a deposit account within a SIPP.

I appreciate that the stakeholder pension is supposed to be a low cost, simple product, but I don’t think that what I want to do is very complicated. It only involves selling 25% of my pension pot and keeping the other 75% invested. I’m annoyed that I will have to move to a different pension product, which may have higher charges, if I want to take this course of action.

If the UK Government wants to encourage more people to put more money into their Stakeholder Pensions, they should make the options for accessing Stakeholder Pensions more flexible. It’s bad enough that you have no access to your cash until you are aged 55, but at least once you reach the age of 55, you should be able to decide how and when you want to release the cash from your pension pot.



One Response to “More Flexiblity Needed for Accessing Stakeholder Pensions”

  1. Good News! The new Dacia Sandero…(only kidding), pension rules are changing from 1st March. Not sure of all the details yet, but it looks like you now have more cchoices over whether you buy an annuity at all or not.
    BBc link here: