12:32 20 January 2013
There are several similarities between Stakeholder Pensions and Self-Invested Personal Pensions or SIIPs. However, they also have key differences. Knowing these will help investors choose wisely as they prepare to build their retirement fund.
Both pensions are governed by the same tax relief and contribution allowance rules. When choosing, investors should pick one based on their personal circumstances, size of pension fund, risk appetite, and long-term objectives.
Stakeholder pension is designed to simplify the process of building your retirement fund. You make contribution every month and the fund will provide you with lump sum and income in retirement. One of the main differences from SIIP is that investment choice can be limited and investments are managed by the pension provider. Also, investors are not subjected to penalties should they decide to increase, decrease, stop, or even restart the payments.
Self-invested personal pensions are basically the same with stakeholder pensions when it comes to eligibility, tax relief, and contributions. However, it is different when it comes to the kind of freedom it gives the investors. The money you put here can be invested into funds that you’ve selected.
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