How do I find out which stakeholder pension is best for me?

14 July 2015


I want to put £2,800 into a stakeholder pension for the next five years. How do I pick which company to invest with and ensure it has the lowest charges and the best performance?
LB/via email


Choosing a stakeholder pension is a bit like choosing a car. It's very personal, and what suits your friends and family might not suit you. Make sure you are clear about how much you'll be charged each year; the period by when you wish to take your funds out; your attitude to risk; and the fund options available should you want to increase or decrease the risk of your investment and therefore change your funds.

A good first port of call would be to see an independent financial adviser. Also, the Money Advice Service offers a pension comparison facility. You answer a few simple questions and the pension calculator produces a table with the various pensions on offer.

Be warned that this facility cannot cater for all your needs and may fail to identify them but it does offer a view of sorts as to the choices you have.

Check whether your employer offers a workplace pension that it contributes to. Failure to join is like turning down the offer of a pay rise.

The amount your employer puts in can depend on how much you're willing to save, and may increase as you get older. For example, your employer may be prepared to match your contribution on a like- for-like basis up to a certain level but could be more generous.

David Wesley-Yates is a chartered tax adviser at Red & Black Accountancy