Stakeholder FAQs
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 £235,000 and benefit from full income tax relief.
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, as detailed below. Information on risk ratings for each fund can be found in the key features document.
1. Managed fund
Objective: To maximise long term growth from capital and income.
Strategy: To invest in one or more of the other specialised investment-linked funds with a view to maximising the long-term yield. The choice of units is managed and regularly monitored by NFU Mutual's investment team. From time to time, the fund is likely to be heavily exposed to UK and overseas equity markets and will therefore reflect the volatility of those markets.
2. Mixed fund
Objective: To achieve balanced long term growth from capital and income while keeping risk to an acceptable level.
Strategy: To invest in a combination of the other specialised investment-linked funds with a view to maintaining a reasonable spread across different investment sectors. The mix of units is managed and regularly monitored by NFU Mutual's investment team. The fund offers a widely spread exposure to the world's investment markets.
3. UK Equity fund
Objective: To provide long-term growth by investing in UK company stocks and shares.
Strategy: To invest in a wide range of UK companies. The portfolio invests in good quality shares, including large 'blue-chip' companies, overseas earners, recovery stocks and smaller companies. The fluctuations of the UK stock market will be reflected in the short term.
4. International fund
Objective: To aim for long-term growth through investment overseas.
Strategy: To invest in a number of stocks throughout the world. The major part of the fund is likely to be in shares in companies in the USA, Europe and Japan. Investments can also be made in the smaller markets, which can be more volatile but can also produce good returns. The value of units may rise or fall purely because of changes in exchange rates.
5. Property fund
Objective: To aim for long-term growth through investment in property and/or property related shares.
Strategy: To invest in a selection of UK property and/or property related shares. The value of units will reflect UK property valuations and stock market fluctuations. However, the fund will need to grow to a substantial size before it is likely to invest directly in property.
6. Index-Linked fund
Objective: To maximise returns from the index-linked securities market.
Strategy: To invest in UK Government or corporate index-linked securities issued in sterling. Both the income and the redemption payments of an index-linked stock are tied to the Retail Price Index. Such investments and the returns from them are heavily influenced by fluctuations in interest rates and by expectations as to future rates of inflation.
7. Fixed Interest fund
Objective: To maximise returns from the fixed interest market.
Strategy: To invest in UK Government and corporate fixed interest securities. Such investments and the returns from them are heavily influenced by fluctuations in interest rates and economic conditions.
8. Deposit fund
Objective: To invest in secure UK money market accounts. The fund is an ideal temporary haven for capital pending investment decisions but should not be regarded as a vehicle for long-term investment.
Strategy: To place money on short-term deposit in the UK money markets to secure competitive rates of interest. The return will reflect the short-term interest rates prevailing in the money markets from time to time.
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.
The above information is based on NFU Mutual's understanding of current tax legislation which is subject to change.
Full details of this policy can be found in the Stakeholder Pension Key Features Document, which should be read and understood before you decide to proceed with any purchase. This can be requested via our contact us page or by calling free on 0800 622 323.
For security and training purposes, telephone calls may be recorded and monitored.
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