SIPPs versus Stakeholder Pensions
SIPPs and Stakeholder pensions are both types of personal pensions but they do have a number of different characteristics and are likely to suit different people.
What is a stakeholder pension?
Stakeholder pensions were introduced in 2001 as an option for people looking for a simple pension. They must meet a set of minimum standards, which have been set by government to make sure they are simple to use and have low charges. They tend to have less investment choice than SIPPs.
SIPPs are designed to give you greater control over your pension savings by giving you access to a wide choice of investments and much greater freedom in managing your pension fund.
In the table below we compare our Best SIPP to a typical stakeholder pension.
||More than 2,000 funds plus shares, Investment Trusts and ETFs
||Stakeholder pensions typically offer around 10-200 funds. In some cases the range of funds available could be from only one fund manager. With stakeholder pensions there is often no share dealing service
||Available in annuity or drawdown
||Typically don't provide drawdown, only annuity
||Switch funds online at no cost
||May incur charges to switch or have to call to get switches processed
||From £0 - £250k:
From £250k - £1m:
This fee is paid by all clients. Any annual management fees or dealing fees (e.g. shares) will be in addition to this figure.
|Stakeholder pensions do not incur platform fees.
||Annual management charge from 0.25% to 2.5% for funds, with additional fees for share dealing
||Typically 1.5 capped reducing to 1% after 10 years
||Initial lump sum and optional monthly payments
||Regular and/or one-off payments; can have a minimum requirement to make monthly payments
|Access to your account
||24 hour access 7 days a week - view and manage your pension online, or speak to our investment experts to guide you
||Limited online access - if you have more than one pension you can't view them in one place. Most likely to have call centre staff on the phone
||Access to free investment research, readymade portfolios, investment advisers and a discretionary management service
||No in-house research team and generally no option for readymade portfolios, direct contact with advisers or discretionary management
This is not a personal recommendation, or advice to use any of our products and services.