Stakeholder Pension

Saving for your retirement

Designed for adults and children, the Stakeholder Pension gives you a low cost way of saving for your retirement in addition to any Police pension arrangements.

Benefits

  • Flexibility to save regularly and make top-up payments from £20

    Choose to take up to 25% of your fund as a tax-free lump sum*

    Automatic 20% tax relief so for every £100 you save, £125 is added into your pot*

    A great way to save for your retirement*

    Access your money when you're 55 (57 from 2028), whether you've retired or not

    Use your pension fund to provide an income and/or lump sum in retirement

    Boost your retirement income and/or lump sum. You may not get the full benefit of an occupational (company) scheme.

*The (not so) small print

The value of your fund can go up and down and you may get back less than you invested.  

The value of tax benefits depends on your individual circumstance and tax rates or legislation which could change in the future.

Important Information

It is important you understand all of the key features of the Stakeholder Pension plan if you are considering applying.

Stakeholder Pension Important Information

Top Up Plans

Police Mutual Top up (AVC) Plans and Stakeholder Pensions

If you have an existing pension policy through Police Mutual, we'll contact you in writing around five months before your expected retirement date. This is to let you know what your options are and to find out what it is you want to do with your retirement funds.

Are we up to date?

If you are approaching retirement, it is important you ensure we have your up to date contact details, so we can get in touch when the time comes. You should also let us know if you have changed the date you expect to retire.

Your regular payments

If the contributions you make to your Police Mutual pension policy are to continue once your employment with the Police Service stops, you will need to get in touch with us to confirm how your regular payments will be made. Many forces will arrange for your payments to be automatically deducted from your pension income, but it's always worth getting in touch with us to make sure.

Annuity Finding Service

As a Police Mutual Stakeholder or Free Standing AVC policyholder you may be pleased to know that we have set up an arrangement with Retirement Solutions (UK) ltd to allow you to access their 'whole of market' annuity service. They are able to search the market on your behalf to find the best available annuity rates. This is a service we provide for the benefit of our members and we receive no recompense for making the introduction.

To take advantage of this service, please contact Retirement Solutions on 0161 854 0076, quoting reference 'Police Mutual TUPP' or simply email them.

Other things you should know

A Stakeholder Pension is a tax-efficient, flexible, low cost pension plan that you can save regularly towards and make one off lump-sum payments as and when you like.

Your money is invested in the Stakeholder Pension Fund which aims to take advantage of stock market growth during the good times. But like all funds that invest in stock market based assets, the value of your investment will go up and down in line with the financial markets and we cannot predict what your pension will be worth at retirement.

It is very difficult to predict exactly what you'll get back as your payout will depend on the performance of our Stakeholder Pension Fund, which is where your money is invested.

Your money is invested in the Stakeholder Pension Fund which aims to take advantage of stock market growth during the good times. But like all funds that invest in stock market based assets, the value of your investment will go up and down in line with the financial markets and we cannot predict what your pension will be worth at retirement. It could be more or less than you have paid in.

You can save regularly from £20 a month and make top up payments from £20 by cheque whenever you like.

However, like all pensions, there are contribution limits and if you have more than one pension, you need to remember the combined total must not be more than the below otherwise you will be subject to tax penalties.

Annual allowance

You can contribute the greater of £3,600 (gross) or 100% of your gross UK earnings up to £40,000 per year before you are subject to tax penalties.

Lifetime allowance

You can contribute a maximum of £1 million (2017/2018 tax-year) to all your pensions in your lifetime before you are subject to tax penalties.

From April 2018, Lifetime Allowances will be index linked in line with the Consumer Price Index (CPI).

But remember the government may change the tax rules in the future.

Due to tax reasons, you can only make regular payments by Direct Debit and top up your investment by cheque.

Your Stakeholder Pension will continue as normal and you'll still be a member of Police Mutual so you could take out further plans if you want to.

If you die before taking your pension benefits up to the age of 75, your plan benefits can be paid to your beneficiary as a lump sum tax-free. The beneficiary can choose to access the funds as a single lump sum or flexibly through drawdown.

On death after 75 the plan benefits can either be accessed flexibly by your beneficiary, at any age, and taxed at the beneficiary’s highest marginal rate of income tax or can be taken as a lump sum which will be subject to tax at the recipients marginal rate of income tax

Police Mutual currently do not offer the option to access pension funds flexibly through income drawdown, therefore the plan would need to be transferred to another provider with this facility.

The Stakeholder Pension is generally for anyone who doesn't get the full benefit of an occupational (company) scheme.

This could be for you if you're a Police Officer serving less than 35 years and want to boost your pension pot. Or if you're a member of Police Staff looking to build up your pension.

Most people can benefit from a Stakeholder Pension, whether they are employed, self-employed or not employed, providing they are able to make sufficient contributions.

  • Employed - you can contribute to a stakeholder pension even if you're part of an occupational pension scheme. It's a good way to boost your retirement income.
  • Self-employed - a stakeholder pension could be particularly suitable for someone who is self-employed, such as an Officer's partner running their own business.
  • Not employed - even if you're not in work, you can put up to £3,600 gross (£2,880 net) into a pension per year and still receive tax relief. So you get back tax you haven't even paid.
  • Children - there's no lower age limit to stakeholder pensions, so even children can have a plan. You can help your children or grandchildren plan for their long-term future.

But remember the government may change the tax rules in the future.

There are several tax relief measures, so it is tax-efficient, but there is some tax to pay depending on how much you contribute and when you take the benefits.

Here's a summary of the tax relief available.

Contributions

For every £80 you pay into your pension, £100 is invested. This is because the tax you've already paid on your income - at 20% - is given back to you and put into your stakeholder pension.

Non-earners also receive this tax benefit and so will get more tax relief than they've actually paid. Higher rate tax payers can claim further tax relief through their tax returns.

At retirement

When you retire, you can take up to 25% as a tax-free lump sum. Any amount taken as a lump sum above this will be taxed at your highest marginal rate of income tax. If you convert the remainder of your fund into a pension income, it will be taxed as earned income.

But remember the government may change the tax rules in the future.

Our Stakeholder Pension can run alongside the Police Pension Scheme and other occupational schemes. It's a great way to supplement your current pension but shouldn't be viewed as replacement for it.

However, like all pensions, there are contribution limits and if you have more than one pension, you need to remember the combined total must not be more than the below otherwise you will be subject to tax penalties.

If you have a defined benefits pension plan with another provider, you can transfer the value of it to this plan.

If the pension plan you are transferring money from allows you to take more than 25% of its value as tax-free cash when you take your benefits, you may lose this entitlement when you make your transfer

For the majority of people it will remain in your best interests to stay in your occupational scheme (particularly if it is defined benefit) rather than transfer to a defined contribution scheme (like the Stakeholder Pension Plan).

Therefore if you are considering transferring you should speak to an Independent Financial Advisor.

Unfunded public service defined benefits schemes (such as the Police Pension) can not be accepted in to this plan.

We'll send you a statement each year which will show the performance of your pension so you'll be able to keep track of your fund.

You can also contact us when you'd like an update in between your statements.

A Stakeholder Pension cannot be cashed in until you are 55 years of age (57 from 2028). Except within the 30 day cancellation period you have when you first take out the plan.

Saving for your retirement should be seen as a long term commitment. We have a range of options to choose from if you are looking for a different type of savings or investment plan.

Savings & Investments

There's no interest rate with the Stakeholder Pension. Any growth in your investment is based on the performance of our Stakeholder Fund.

1. Use it to buy a guaranteed income

An annuity is a financial product where you use all or some of your pension savings to buy a guaranteed income.

  • Take 25% as a tax-free cash lump sum:
    You can take up to 25% of your pension pot tax-free as a cash lump sum, then use the remainder to buy your annuity. The remainder will be taxable as pension income
  • Take your full pension as an annuity:
    You can use the whole fund to secure a regular income from an annuity and, if you've built up more than one pension pot, you can combine them into one annuity

2. Take it all as cash in one go

25% of the lump sum will be paid tax free and the remainder will be taxable as additional income at your highest marginal rate. The tax relief on any further savings into a money purchase arrangement will be restricted. You will receive tax relief only on money purchase pension savings up to £10,000 a year.
You may find that we deduct more tax than you are required to pay. This is due to the way HMRC collect the tax. You will be able to reclaim any excess directly from the HMRC.

3. Take it as smaller cash sums in stages

As an alternative to taking your whole pension pot as cash, you can take some or all of it as smaller cash sums over whatever period you choose. For each withdrawal 25% is tax free and the rest will be taxed at your highest marginal rate.

Police Mutual will pay up to 25% of your fund as an initial lump sum to you if required (thereby using up your tax free portion), but we don't currently offer a product to enable you to access your remaining pension in this way. You will need to move your fund to another provider if you wish to do this.

4. Use it to provide a flexible retirement income

With flexi-access drawdown you keep most or all of your pension pot invested and draw a variable amount of income from it. You can choose to take 25% of your pension pot as a tax free lump sum either at the outset or in stages alongside the flexible income.

Any payments from the flexi-access fund will be taxable as pension income. Choosing this option may also affect the amount you pay into pension plans.

Police Mutual will pay up to 25% of your fund as an initial lump sum to you if required, but we don't currently offer a product to enable you to access your remaining pension in this way. You will need to move your fund to another provider if you wish to do this.

5. Take smaller pension pots as a lump sum

If up to three of your pension pots are each less than £10,000 and you are over the age of 55, you may be able to cash each of them in, regardless of any other pension savings you have. 25% of the lump sum will be paid tax free and the remainder will be taxable as additional income at your highest marginal rate.

Police Mutual will pay up to 25% of your fund as an initial lump sum to you if required, but we don't currently offer a product to enable you to access your remaining pension in this way. You will need to move your fund to another provider if you wish to do this.

 

Product Summary

Returns

How much you get back depends on the performance of the Stakeholder Pension fund.

Minimum Deposit

From just £20 per month for regular savings.

Make top-up payments from £20 whenever you wish.

Maximum Deposit

You can contribute the greater of £3,600 gross or 100% of your gross UK earnings up to £40,000 per year (2017/2018 tax year) before you are subject to tax penalties.

You can contribute a maximum of £1 million (2017/2018 tax-year) to all your pensions (including occupational pension schemes as well as personal pension schemes) in your lifetime before you are subject to tax penalties.

From April 2018, Lifetime Allowances will be index linked in line with the Consumer Price Index (CPI).

But remember the government may change the tax rules in the future.

Age Limit

There is no lower age limit. So even children can have a plan. You can help your children or grandchildren plan for their long-term future.

It is important you understand all of the key features of the Stakeholder Pension plan if you are considering applying. We recommend you read the document below before you apply and keep it in a safe place.

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