What is a stakeholder pension?

A stakeholder pension (SHP) is a defined contribution pension scheme designed to provide financial benefits for retirement – based on the following factors:
- The amount of money paid into your pension over time.
- The level of charges on your pension.
- How long you’ve been paying into your pension for.
- The level of investment and return on your pension pot.
Pensions are a long-term investment. The money you pay into a pension is invested and the value of investments and any income generated from them can go down as well as up and are not guaranteed. You may not get back the amount originally invested.
You should look to take advice or speak to someone before implementing any major changes to your finances or assets to mitigate the tax-burden.
How does a stakeholder pension work?
Stakeholder pension schemes provide a flexible way to contribute to your pension fund and save for retirement.
Stakeholder Pensions: FAQs
Can you cash in a stakeholder pension early?
Most stakeholder pension schemes won’t allow you to withdraw your funds until you turn 55. However, you should be able to move your funds to another stakeholder pension provider.
Some pension plans will let you cash in your pension funds early, if you become seriously ill.
Do stakeholder pensions offer a drawdown option?
Yes. Most stakeholder pensions will offer a drawdown option. Drawdown becomes available to you once you turn 55, and involves leaving your money invested in your pension pot to withdraw as and when you need it.
Is a stakeholder pension a defined contribution scheme?
Yes, a stakeholder pension is classed as a type of defined contribution scheme. They’re a flexible way to build your retirement savings and top up your state pension once you retire.
Can I transfer my stakeholder pension into a SIPP?
Most schemes will allow you to transfer your funds into a self-invested personal pension (SIPP). You can generally move your stakeholder pension at any time of year before you start drawing out your retirement benefits.

Want to learn more about pensions?
Visit our pensions page and find out how expert advice could help you.
Important legal information
Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.
Schroders Personal Wealth is a trading name of Scottish Widows Schroder Personal Wealth Limited.