What are the benefits of a HSBC stakeholder pension?
The amount I pay each month does not seem to justify the appalling predicted yearly amount of pension I will receive if I retire at 60. What incentive is there to continue paying into this plan especially as I pay into my employers pension scheme. It appears I would be far better off putting this money into an ISA account inspite of todays interest rates.
Asked by Harry P - 1 year ago
Answer: Best answer
The answer depends upon what you are saving for. If it is retirement, pensions are almost certainly the best starting point because of the tax relief. For every £100 you pay in, it costs you just £80. A cash ISA will almost certainly not get close to the potential returns from a pension plan.
Your first step should be to maximise your employer’s pension plan – for example, if you pay in more, does your employer pay in more.
A stakeholder pension is a simple pension scheme and the charges are capped. The projections probably may not look very attractive at first sight, partly because the rates of return shown are those set by the FSA and you may enjoy better (or worse) returns.
There are four issues which will determine how high your pension fund will be at retirement: the amount you pay in, the time you invest for, the charges and the performance of the investments. If you are unhappy with the performance look to other pension schemes, but stick with pension savings.
Disclaimer:
The answers above are for guidance only and should not be acted upon without you receiving independent financial advice relevant to your circumstances. To find an IFA please go to http://www.unbiased.co.uk
Sources:
Danny Cox, Certified Financial Planner, Hargreaves Lansdown
Chartered Financial Planner, Certified Financial Planner and heads the advisory team at Hargreaves Lansdown. Danny is the Money Marketing Best Retirement Planner 2007 and Financial Adviser SIPP Adviser of the Year 2007.