Savings for a child.

[Jockman]

Cheib said:

It has absolutely nothing to do with the parent's contribution limit. It is treated entirely separately. I am already capped and can contribute to my kids pensions.

Correct. The tax relief is also given at the child's rate, not the donor's.

[oyster]

Jockman said:

Cheib said:

It has absolutely nothing to do with the parent's contribution limit. It is treated entirely separately. I am already capped and can contribute to my kids pensions.

Correct. The tax relief is also given at the child's rate, not the donor's.

I stand corrected on point 3 - thank you for clearing that up.

And I wasn't saying investing in a child's pension was a bad thing, I was merely answering a question about why more people don't do it.

I suspect the main reason is the long wait for the money - allied to fear of legislative change against pensions.

[Cheib]

oyster said:

Jockman said:

Cheib said:

It has absolutely nothing to do with the parent's contribution limit. It is treated entirely separately. I am already capped and can contribute to my kids pensions.

Correct. The tax relief is also given at the child's rate, not the donor's.

I stand corrected on point 3 - thank you for clearing that up.

And I wasn't saying investing in a child's pension was a bad thing, I was merely answering a question about why more people don't do it.

I suspect the main reason is the long wait for the money - allied to fear of legislative change against pensions.

The point is that there is not a wait to benefit from the pension...it takes a huge cash flow burden from the kids in their late 20's or early 30's when they would normally be needing to start funding their pensions if they are going to have any kid of pension when they retire.

Sure you the kids dont get a lump sum when they're 18 or 21 (how many kids will spend that wisely) but it goes some way to taking car of a massive liability they have.

The answer is to do a little of everything because second guessing tax legislation if a fools game.

[oldaudi]

That is my view pretty much. I've done a bit of each, they each have their Cash CTF (started with the original £250 per child), Nat West Bank account (pocket money and birthday money goes in here), a Stocks and Shares Fund (in trust, my name, I buy FTSE shares and various funds) a 10 year savings Bond (matures in 3 years time) and a SIPP (shares and funds). I pay monthly into the SIPP, CTF, Stocks and Shares Fund and 10 year bond. My view is that they will get some as a lump sum when they are 18 which we can use towards housing, further education, driving tests and cars to help them drive to their jobs . Then when they start their first job they will have a fair few years head start into their pension.

All of this was started at birth for the youngest, at the same time my eldest was 3

I know tax rules will change, I know they might not be able to reach their pension until they are 60+ (who knows what rules will change) but this is also aimed at their financial education.

Together with the 20% from the Government in the SIPP and compound interest (accumulation funds and reinvested income) its doing pretty well over the last 7 years.

am I mad? Possibly. Will they throw it all back in my face and waste it on drugs and booze? Possibly.
But if they dont I know Ive given them a 18 year head start if they grow up and be sensible.

Edited by oldaudi on Friday 18th November 07:57

Edited by oldaudi on Friday 18th November 08:00