A stakeholder pension is a certain type of personal pension that is owned by an individual. The stakeholder pension must meet certain standards as they must be flexible and a have certain limit on the annual management charges. This type of pension has low minimum payment and payments can be restarted by individuals whenever they wish.

A stakeholder pension operated in the same way as most other money purchase pensions do, an individual pays money into the pension in order to build up a pension fund for when they retire.

The managers of this pension fund will invest the money from the pension fund on behalf of the individual. How much this pension fund will be worth is dependent upon how much has been contributed and how well the fund performs when it has been invested. People who have this type of pension are usually advised to make regular contributions. Payments can be stopped and restarted at any time, it is down to the owner of the pension to choose when they make payments. Although it is worth considering that if payments are stopped then the pension fund will be smaller when the pension is drawn by the individual.

When the pension is due to be paid the fund can be used in order to purchase annuity. This is a regular income that is paid for the life of the individual, and it can be bough from any life insurance company. In the majority of cases a pension is drawn between the ages of 60 and 65. Although it is possible to draw a stakeholder pension whilst still at work.

The stakeholder pension must meet certain regulations and laws just like any other type of pension. For example there is a limit on the annual management charges that can be made. The fees can go up to one and a half per cent of the pension fund value each year for the first ten years that the product is held and after this the maximum fee that can be charged is one per cent.

The owner of a stakeholder pension also has the flexibility to switch to a different pension provider without a charge being imposed. Contributions can start from