The schemes were introduced on 6 April 2001 as a consequence of the Welfare Reform and Pensions Act 1999.
They were intended to encourage more long-term saving for retirement, particularly among those on low to moderate earnings.
Although many stakeholder pensions have been taken out, they have largely not been successful in encouraging lower earners to save more.
The UK government announced in May 2006 that it proposed to introduce a new type of low-fee pension scheme called a Personal Account, which was renamed National Employment Savings Trust (NEST) prior to its introduction under the Pensions Act 2008.
The holder makes payments (usually on a regular basis) which the provider invests on their behalf.