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

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 Boring Money

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

Boring Money