What is a stakeholder pension?
A stakeholder pension is a simple, low-cost personal pension meeting government minimum standards: capped charges, low minimum contributions, and no penalties on transfer or on stopping payments. It offers a limited investment range and a default fund for people who do not want to choose.
Introduced in 2001 to widen pension access, they have largely been overtaken by automatic enrolment on one side and low-cost SIPPs on the other. Many remain in force.
They can be opened for a child or a non-earner, with contributions up to the annual limit for non-earners still attracting basic rate tax relief. That makes them a quiet option for grandparents wanting to give something with a long time horizon.
If you hold one, the question is usually whether its charges and fund range still stand comparison — not whether it was a reasonable choice at the time.