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Is it better to contribute to a Vanguard SIPP with low charges than a stakeholder pension? Or does the stakeholder pension have special advantages over the Vanguard SIPP?

18 March 2022

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Question by Kim

Is it better to contribute to a Vanguard SIPP with low charges than a stakeholder pension? Or does the stakeholder pension have special advantages over the Vanguard SIPP?


Answered by Andrew Neligan

Hi Kim,

Stakeholder pensions were introduced in 2001 with the aim of making pension charges clearer and fairer to pension savers. In the bad old days before that, pensions were highly charged and opaque. However, since then the market has improved significantly for the benefit of pension savers with costs going down and transparency increasing.

Stakeholder pensions haven't really kept up with market developments and often can be higher charged compared to pensions provided by companies like Vanguard or have fewer investment options compared to other pension providers. I have written about SIPPs here: https://neliganfinancial.co.uk/sipp/

It is important to consider charges when selecting a pension provider but, ultimately, how much you are contributing and how you are investing are the two variables that will make the biggest difference to how much you have in retirement.

I hope this helps.

Andrew

Answered by

Andrew Neligan

Chartered & Certified Financial Planner

Typically, I work with individuals and couples who have got to the point in their lives that they have important questions about money they want answering. They may be thinking about retirement in the next 5 to 10 years but they are worried they won’t have enough so they want to make sensible decisions now. Or, they really want to retire sooner, but either they don’t know if they can afford to, or they are afraid they will make decisions that they may later regret.