Stakeholder Pension Plan FAQ

How does the NFU Mutual stakeholder pension work?

When you invest money into the NFU Mutual Stakeholder Pension, you buy units in one or more of the eight funds available. This enables you to tailor your investment to your own needs and attitude towards investment risk.

More information on the funds available can be found further down this page.

Am I eligible?

To take out a Stakeholder Pension you must be aged between 18 and 75 years old.

If you are under 18, your parent or legal guardian must apply on your behalf.

How much can I invest?

There is currently no minimum contribution for this plan. There are maximum contribution levels that are set by the Government. You can contribute a maximum of £3,600 gross per annum, or if your net relevant earnings per annum are higher than this, you can contribute up to the level of your earnings, subject to a limit of  £245,000 and benefit from full income tax relief.

The 2009 Budget restricts tax relief on pension contributions for those earning £150,000 or more a year. The definition of a high-income individual depends on income during the applicable tax year and the two preceding tax years. Thus some individuals may currently have income below £150,000 – in fact they may even be basic rate tax payers – and still qualify as a high-income individual. All taxable income must be taken into account, including earned income, dividends and salary sacrificed for pension contributions after 22 April 2009.

HMRC have introduced a new special annual allowance of £20,000, or up to £30,000 where the average of infrequent money purchase contributions exceeds £20,000. Payments which do not exceed this amount within one tax year are not affected. Any pension payments made by high-income individuals, which exceed the special annual allowance and are not otherwise protected, will be subject to a special annual allowance charge which is intended to effectively limit tax relief on these payments to the basic rate.

The anti-forestalling provisions only apply to tax years 2009/10 and 2010/11 but it is possible that the definition of high-income after 2011will still include the previous two years' income.

You should remember that if you reduce or stop your contributions to this plan, you may not meet any target benefit that has been projected.

Will my contributions automatically increase in line with national average earnings?

Yes, your contributions will automatically increase each year, on the anniversary of the date of the first contribution, in line with the increase in National Average Earnings (NAE). You can choose not to increase your contributions, or to have them increase at a fixed rate of 5% or 10% each year if you prefer.

Can I take money out of my stakeholder pension?

No, you cannot make regular withdrawals on your pension investment.

The only time you can access this money is when you reach age 50 or over (from the year 2010 this will increase to age 55 or over). It can then be used to purchase benefits to suit your circumstances.

How can I follow the progress of my pension?

You will receive an annual statement which will show you the value of your investment and tell you about its performance. You should remember that the value of this type of plan can go down as well as up so you may not get back what you invested.

What is lifestyle switching and can this be applied to my stakeholder pension?

If you've made your own choice which funds to invest in under your stakeholder plan, you can choose whether to have lifestyle switching apply to your plan.

Lifestyle switching means that over the lifestyling period, your pension savings are gradually moved into less volatile investments. As a result of this, you should have greater capital protection of your pension fund value. However, this also means there is likely to be less opportunity for growth, so you should carefully consider whether you would like to try to maximise growth opportunities right up to your selected retirement age.

How much might my policy pay out?

You can request an illustration of potential benefits by calling our Customer Services Team free on 0800 622 323.

The actual amount will, however, depend on the number of units you have in each fund and their prices. You should note that future inflation could make the value of your pension worth less than it would be today.

What happens when I want to retire?

You can choose to draw your pension any time between the ages of 50 and 75 years. From 2010 the minimum retirement age will be increased to 55 years.

Do I get a tax-free lump sum from my stakeholder?

You can choose to take up to 25% of the value of your pension as a tax-free lump sum.

What can I do with the remainder of my pension fund?

The remainder of the value of your pension can either be re-invested to produce an income, or it can be used to purchase an annuity which provides you with an income (which is taxable).

What happens if I die before I've drawn my pension?

If you die before taking your pension, the value of your fund may be paid to the nominated person(s) of your choice.

What funds are available to invest in?

There are a total of eight Stakeholder Pension funds to choose from. Full information on the funds and their risk ratings for each fund can be found in the Key Features Document.

Can I switch funds easily?

You can switch your investment occasionally to different funds free of charge.

Alternatively, we have a regular monthly switching facility which enables you to switch a specified proportion of your investment from one fund to another every month.