Published 29 June 2012 · Last reviewed 1 May 2026
A stakeholder pension is effectively a low personal pension.
The only way that a stakeholder pension differs from a personal pension is that a stakeholder pension has certain minimum standards that it needs to adhere to.
For example, the charges and investment choice are restricted and the entry level in terms of minimum contributions is low.
Investment Options
Depending on the provider there may be a default investment choice. This may be the only choice, or there could be a choice of funds available.
With profits funds are allowed in theory, but the fund cannot contain any element which is not directly related to stakeholder policies i.e. it cannot contain non-stakeholder assets.
There is also a lifestyle arrangement for the default investment choice. ‘Lifestyling’ is an investment strategy whereby your funds will be automatically be moved away from riskier investments into more secure investments as retirement approaches.
Minimum contribution levels for a Stakeholder pension
A stakeholder pension scheme must be able to accept contributions in any frequency including regular contributions, adhoc contributions and annual contributions.
The stakeholder cannot set the contribution level above £20 (net).
For example, you could pay just £20 into a stakeholder plan every so often.
Payments must also be accepted by cheque, standing order, direct debit and direct credit (i.e. online banking transfers).
Richard Stokes is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.