If you have a stakeholder pension then be sure to avoid the potential 1.5% annual charge after 10 years..
The more you repeat a lie, the more people end up believing it. Some 12 years ago, the Government invented the stakeholder pension and told everyone it was cheap, which in fact it wasn’t. Later, they allowed providers of these policies to increase charges from 1% of the fund invested to 1.5% after ten years. Reading one of the personal finance rags the other day, I came across one of our better known pundits writing about ‘cheap’ stakeholder.
Here is some advice, which probably ought to be regulated. If you have a stakeholder pension, and you have been contributing for, say, five years, you have paid hardly any charges. If your pot is £10,000, you’ll be paying £2 a week, which is still not bad. If the funds in which you are invested are doing really well, it might make sense to stay put. But if they’re not so hot, you might well look around for something better, and the chances are that a decent adviser will find you something better.
At the very least, if you are among those coming up to an increase in charges to 1.5%, you should time your exit so you never pay it. If everyone uses stakeholder to start off with, and then transfers out as soon as the charges start to rise, the stakeholder providers will lose a fortune. Serves them right for pandering to a daft Government.
Read this article at http://www.candidmoney.com/articles/article157.aspx
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