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The Government introduced Stakeholder Pensions in April 2001. Most employers are obliged to provide access to a Stakeholder Pension, although some employers already offer suitable pension provision, which exempts them from such an obligation.

Broadly speaking, Stakeholder Pensions work in the same way as Personal Pensions but to be classified as "Stakeholder", they must meet certain mandatory standards including:

• an overall charge limited to a maximum of 1.5% per annum for the first 10 years of the contract. This charge must reduce to a maximum of 1% after this time
• the facility to stop and restart contributions without penalty
• transfers must be accepted and transfers out must be penalty free. The only exception to this is the facility for Providers to levy a Market Value Adjuster (MVA) on With Profit funds following prolonged poor market conditions
• a default investment fund incorporating an element of life styling
• an annual information statement to members
• a governance procedure established to safeguard the interests of members
• a minimum contribution level of no more than £20 per payment

Legislation allows contributions to both Personal Pensions and Stakeholder Pensions. Many Personal Pensions also comply with these guidelines, but Providers' retain the right to alter the terms and conditions of the contracts at some future date. As with Personal Pensions, the member selects the investment fund(s) and any investment growth accrues, largely free of UK tax, on the contributions paid.