Pension for a child

[LeadFarmer]

Anyone here set up a pension for their children?

I'm about to set up a pension for my 11 yr old lad, possibly going with a Hargreave Lansdown Junior SIPP. The idea being that by the time he's in a position to start paying into a pension he will already have a few years worth of contributions under his belt. Compounded interest over say 40+yrs should help him. I'll be starting it off with a lump sum, and then monthly contributions. Nothing large, maybe £1000 and £40/month.

Before anyone suggests using the money to help buy him a house/car/wedding, I already have some plans in place for these. Its just the pension I'm interested in.

[red_slr]

My only concern these days is the age at which he may be able to draw the pension.
You could be looking at 70, almost certainly 60 at the very least. If you are happy with that then ok.
Its possible he may never see the money. It is however protected against bankruptcy and can be left in trust to his wife etc so its a "safe" investment in that regard.

[oldaudi]

This has been done several times in here so it may be worth searching for previous threads.
My girls have a SIPP with HL. A great platform but others can be cheaper. I know we don’t know what the future will bring regarding tax and retirement age but starting a pension for a child for me was a way to hopefully educate them financially and ensure they try to take care of their own future and not depend on government hand outs. At the age of 11 and 8 they both now have a value in their SIPP that would shame many adults. Compound interest, reinvested income and 20% tax break certainly helps it all add up. They have a mixture of blue chip shares held for the income (income reinvested) and various. funds with accumulating option. They also have other accounts for use when they reach 18

Edited by oldaudi on Saturday 30th December 13:23

[LeadFarmer]

Regarding the tax relief, I will be making regular monthly payments by direct debit into the pension. Obviously I have already paid tax this money, so how do I get the tax relief as the payments aren't going to be taken from my wages prior to me paying tax?

[joestifff]

I believe regarding the tax relief that’s HL just tops up the 20%. So an extra £10/month in your case.

I will be following this thread as I am also interested in exactly the same. Same amounts and everything and with HL.

What I can’t work out is how to invest it? Monthly? Annually to reduce fees?

[dingg]

you won't get the relief , the child will get an extra 20% added by the pension provider.

[Welshbeef]

Wouldnt this be a ISA (Pension) and am I not right in saying as it’s a ISA (pension) If there was a need to take it out at any point that could be done - but the moment you do that the tax rebates paid are deducted + the corresponding compound performance.

It’s a great idea some grandparents start it much earlier ie soon after birth then monthly Direct debit (doesn’t have to be a lot but 21/22 years before thy finish education with all those years invested and compounded plus another 40-50 years compound growth to come it should be good.

[LeadFarmer]

dingg said:

you won't get the relief , the child will get an extra 20% added by the pension provider.

Thats all good then.

[CoolHands]

I opened Vanguard LifeStrategy 100% Equity Accumulation (GBP) as I liked the spread of holdings, with Hargreaves Lansdown for my child. I pay 80 in a month, so it effectively gets topped up to a 100. I think their junior sipps have low charges as I recall when I looked at the time of setting up.


Charges:

http://www.hl.co.uk/pensions/vantage-junior-sipp/j...

Edited by CoolHands on Saturday 30th December 17:52

[Jockman]

LeadFarmer said:

dingg said:

you won't get the relief , the child will get an extra 20% added by the pension provider.

Thats all good then.

Correct.

I put in £80 per month for 3 kids and 3 grandkids.

The Govt tops each one up to £100 every time.

Tax relief is at the child's rate, regardless of your income.

[BanzaiMan]

CoolHands said:

I opened Vanguard LifeStrategy 100% Equity Accumulation (GBP) as I liked the spread of holdings, with Hargreaves Lansdown for my child. I pay 80 in a month, so it effectively gets topped up to a 100. I think their junior sipps have low charges as I recall when I looked at the time of setting up.


Charges:

http://www.hl.co.uk/pensions/vantage-junior-sipp/j...

Edited by CoolHands on Saturday 30th December 17:52

Any reason you went for that and not the something like?

http://www.hl.co.uk/funds/fund-discounts,-prices--...

[CoolHands]

Mine is mostly United states (40%) then uk (23%). Yours is states 45% then japan 8%, uk 5% ...

I just made my decision on what I think is sensible. I wanted to be mostly US and UK. Mine effectively incorporates the one you linked to as it has a 20% holding in the US equity index which is more or less the same companies as per your one http://www.hl.co.uk/funds/fund-discounts,-prices--...

So it incorporates the same companies your one linked to but in a more watered down format. Your one is too US-centric for me.

[GingerMunky]

Yep, HL SIPP with a few funds. But with at least 50 years before my child can withdraw the money I don't put too much in. In 50 or may 60 years who knows what changes will be made to pension rules, particularly as pensions are often a political football to be kick from left to right and back again in 50 budgets between now and then.

Better to put most of the savings into a JISA, your child can then use this when they are 18, for uni, car, traveling, house, etc...

[BanzaiMan]

CoolHands said:

Your one is too US-centric for me.

That's fair enough.

[kurt535]

Buy a few acres of land, no IHT issues and they don't make it anymore!

[kurt535]

Jockman said:

LeadFarmer said:

dingg said:

you won't get the relief , the child will get an extra 20% added by the pension provider.

Thats all good then.

Correct.

I put in £80 per month for 3 kids and 3 grandkids.

The Govt tops each one up to £100 every time.

Tax relief is at the child's rate, regardless of your income.

Jesus, my son drew the short straw with his tight-as f*&k grandparents!! The wealthy individuals are worth a couple of bar but contribute 4/5ths of f*&k all towards his schooling/activities, etc. Fancy adopting another child?

[sidicks]

kurt535 said:

Buy a few acres of land, no IHT issues and they don't make it anymore!

I reckon that for £40 per month you'll struggle to buy much land!!

[theboss]

I've been thinking avout doing this too... you can contribute a maximum of £2880/annum which is topped up to £3600. It would be nice to think that by the time they started thinking about their own pension contributions in adulthood they were sat on an already enviable accumulation that still had another 30 years of compounding growth. No risk of it getting spaffed up the wall as soon as they reach adulthood, in the same way that a junior ISA might.

[anonymous-user]

theboss said:

No risk of it getting spaffed up the wall as soon as they reach adulthood, in the same way that a junior ISA might.

I do find this a bizarre viewpoint and one I hear a lot.

My kids have JISAs and while it legally transfers to them, I have confidence/hope that the way I raise them will mean that they have respect for my wishes for the money.

[dingg]

Badda said:

I do find this a bizarre viewpoint and one I hear a lot.

My kids have JISAs and while it legally transfers to them, I have confidence/hope that the way I raise them will mean that they have respect for my wishes for the money.

wait until they're unruly rebellious teenagers and see how you feel then