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Main Features

As mentioned previously these pensions have minimum standards.

  • A stakeholder pension must accept contributions at any frequency and the minimum contribution level cannot be above £20 net.
  • The charges of the pension depend on the joining date:
    • Before 6th April 2005 – max charge of 1% pa
    • After 6th April 2005 – max charge of 1.5% pa for the first 10 years and then 1% after
  • Investment options must have a default option with new members offered a lifestyle arrangement

Question - Use Your Note Taker To Jot Down Ideas / Calculations

Someone taking out a new stakeholder pension must be offered what type of fund as the default investment choice?

Select one:

a) Target date fund.

b) With-profits fund.

c) Lifestyle fund.

d) Managed fund.

C)

Chapter reference 5E

NEST has the default option of a Target date fund, but stakeholder pensions will use a Lifestyle fund as the default option.