Which Stakeholder Pension?

Some of the answers might be found in the tables here:

Where did you hear this? In the pub?

That's not to say that the informant is not correct, just to enquire what he knows about it.

How do you define 'best'? Charges? They are all basically the same. But you can get the charges for any of them reduced if you go to an IFA who is prepared to reduce them - and charge you a fee in the process, maybe.

Fund growth? Which fund?

Are you sure you want a stakeholder? Are you prepared for the restrictions therein?

Rob Graham

I received my annual statement recently. This stated that out of an index of 100 comparing similar funds the Norwich Union's balanced managed fund scored 31. Some time ago (may be a few years) I read that the Norwich Union wasn't continuing to advertise its stakeholder pensions as it felt that the income it was making from them was too low (can't remember where I read it, maybe BBC news online). I'd taken this stakeholder out in 2001 and put in the £3600 at the time. Since then I haven't been adding to it, mainly because it actually made a loss in the first few years! Now the fund is worth around £4300 ie its made £700 in 5 years. I'm now in a position to put more money in, however I want to make sure I'm in a good fun. I know that the Portman Building Society use Friends' Provident for their own staff stakeholder (although the products they sell to custumers are Norwich Union). Relations have recommended Standard Life, however that was before they demutalised and the main reason my have been due to the windfall you'd get after demutalisation.

Elsa von Brabant

By best I really meant which company has default funds which perform the best, ie make the most profit. The don't want to invest in th ehighest risk funds and am not knowledgeable enough to keep switiching funds myself according to market conditions, am interested in a company which has a default fund which makes the best profit compared to other company's default funds. If Norwich Union's balanced managed fund (accorsign to NU itself) only scores 31 out of an index of 100 which compares similar funnds, then which companies are scoring 100?

All managed funds would have made a loss during this period because the stockmarkets went down extremely severely. It's classic for people to stop investing when markets are down and reinvest when they are up. Unforunately, doing this means that you are buying when prices are high, not when they are low. Pity.

Now the fund is worth around 4300 ie its made

Yes, but this particular 5 years has not been good for investing. NU's peers won't have been a lot different. Mind you, if you'd been in NU's property fund you'd be laughing.

If you had NU's non-stakeholder version (called Your Pension Select) you would have access to a whole range of funds that arguably might do better than NU's own. Mind you, the charges are a bit higher if you use these because they are run by external fund managers. But maybe you only get what you pay for.

I'm now in a position to put more money in, however I want to make sure I'm in a good fun. I know that the Portman Building Society use Friends' Provident for their own staff stakeholder (although the products they sell to custumers are Norwich Union). Relations have recommended Standard Life, however that was before they demutalised and the main reason my have been due to the windfall you'd get after demutalisation.

If you are going to do your own investigation, get a copy of Money Management and you'll see fund performances listed in the back (if you can understand it!). It seems to me you need to talk to an IFA before you make a mistake. It's not going to cost you any more than doing it yourself (unless he charges a fee - ask him first).

Rob Graham

What about your mortgage (or any other debts) instead of putting it into a pension now?

If you'd used that 2800 to reduce your mortgage in 2001 you'd have saved about 140GBP interest in year 1, 150 in year 2, 160 in year 3, 180 in year 4 and 210 in year 5 for a total of about 850GBP saved. (I'm assuming about 5% interest). The capital owing on your mortgage would be 3650 less.

Even assuming you are entitled to no tax relief on pension contributions other than the stakeholder allowance, you could now take 3500 out of your mortgage leaving you with a benefit of 150 on your mortgage and then pay that into a pension. With the tax relief on the first 2800 you'd have 4300 in your pension like now. If you paid it in over two years you'd only need 3350 of that 3650.

If you have any other debts, bank loan, car loan, credit cards etc you'd have done even better. (another 1000 if you've a loan at 10%, another

Tim.