Choosing a Personal Pension plan for a youngster - ideas?
Discussion
After a bit of prompting from me, I have a financially unsophisticated 18 year old niece* who likes the idea of taking advantage of compounding to save into a pension for her old age :-)
How on earth does someone so young choose a pension provider that is going to provide for her in 40 years time? Does she go with traditional providers that don't even seem to be able to payout monies to their pensioners when it is due or does she go for a newer Fin Tech provider like Pensionbee that has only been around 9 years and has likely toppy annual charges?
Can't imagine she'd cope with a SIPP, so a provider with low charges that is also going to look after her would be good.
*Currently a taxpayer and will have student loans, would paying into a pension have any effect on how much loan she has to pay back.
How on earth does someone so young choose a pension provider that is going to provide for her in 40 years time? Does she go with traditional providers that don't even seem to be able to payout monies to their pensioners when it is due or does she go for a newer Fin Tech provider like Pensionbee that has only been around 9 years and has likely toppy annual charges?
Can't imagine she'd cope with a SIPP, so a provider with low charges that is also going to look after her would be good.
*Currently a taxpayer and will have student loans, would paying into a pension have any effect on how much loan she has to pay back.
I'd suggest in the first instance she speaks with her employer and what scheme they run. Many employers are extremley reluctant to pay in to any scheme other than the one they run themselves as it creates a lot of additional admin for payroll otherwise.
Whilst it may not be the best scheme in terms of charges, its a start and the employer contribution will likely more than negate any downside of going solo and potentially missing out on their contrib.
Whilst it may not be the best scheme in terms of charges, its a start and the employer contribution will likely more than negate any downside of going solo and potentially missing out on their contrib.
my kids have set up a Vanguard scheme at 18 and 19. Easy to do charges seem to be low. We have found with the youngest that she was not able to enter workplace schemes as I think the minimum age is 21 . Similarly nipper has just landed a grad role at BAE Systems and I forget but the ‘topup’ on top of his saving but it is very generous. He did his placement year there and was pleasantly surprised when a statement from Standard Life arrived with just over £1600 on it.
Edited by Ziplobb on Thursday 6th April 17:09
As others have said, low fee Vanguard SIPP seems to fit.
How much will she be contributing? Have you/she looked at a LISA? That may be a better option if buying a property is a goal.
With a LISA you can put in up to £4k a year and get a 25% uplift from the gov (so it's still tax efficient). Can be used towards a first home or when you're 60.
How much will she be contributing? Have you/she looked at a LISA? That may be a better option if buying a property is a goal.
With a LISA you can put in up to £4k a year and get a 25% uplift from the gov (so it's still tax efficient). Can be used towards a first home or when you're 60.
AdamV12V said:
I'd suggest in the first instance she speaks with her employer and what scheme they run. Many employers are extremley reluctant to pay in to any scheme other than the one they run themselves as it creates a lot of additional admin for payroll otherwise.
Whilst it may not be the best scheme in terms of charges, its a start and the employer contribution will likely more than negate any downside of going solo and potentially missing out on their contrib.
No employer involved as such, contributions are via a child pension that can't be reinvested into a pension with that provider. Whilst it may not be the best scheme in terms of charges, its a start and the employer contribution will likely more than negate any downside of going solo and potentially missing out on their contrib.
So it's a personal pension provider that takes away the worry of choosing that is needed, she has landed on "Pensionbee" and I'm pretty sure they would be unsuitable (more costly, aimed at consolidating multiple pensions) for her compared to other providers. Perhaps I'm wrong to be thinking this.
thepeoplespal said:
No employer involved as such, contributions are via a child pension that can't be reinvested into a pension with that provider.
So it's a personal pension provider that takes away the worry of choosing that is needed, she has landed on "Pensionbee" and I'm pretty sure they would be unsuitable (more costly, aimed at consolidating multiple pensions) for her compared to other providers. Perhaps I'm wrong to be thinking this.
Sign up for a SIPP here:So it's a personal pension provider that takes away the worry of choosing that is needed, she has landed on "Pensionbee" and I'm pretty sure they would be unsuitable (more costly, aimed at consolidating multiple pensions) for her compared to other providers. Perhaps I'm wrong to be thinking this.
https://www.vanguardinvestor.co.uk/what-we-offer/p...
Pick one of these 5 - I'd say LS100, LS 80 or maybe LS 60 but no lower:
https://www.vanguardinvestor.co.uk/what-we-offer/l...
Invest regularly & don't mess with it.
ILikeCake said:
As others have said, low fee Vanguard SIPP seems to fit.
How much will she be contributing? Have you/she looked at a LISA? That may be a better option if buying a property is a goal.
With a LISA you can put in up to £4k a year and get a 25% uplift from the gov (so it's still tax efficient). Can be used towards a first home or when you're 60.
LISA probably not suitable for her circumstances as she has already bought a home near her University & can currently access a pension 3 years earlier than a LISA, that might be important when she gets to 57.How much will she be contributing? Have you/she looked at a LISA? That may be a better option if buying a property is a goal.
With a LISA you can put in up to £4k a year and get a 25% uplift from the gov (so it's still tax efficient). Can be used towards a first home or when you're 60.
Unless she's a higher rate taxpayer, I would suggest considering am ISA, so the cash is accessible before pension time.
Personally I did a bit of both (though not enough) from quite a young age, and it was nice to know I could have accessed a wedge in my 40s when I was looking at investing in my business. There are a range of other reasons for people to regret tying everything up.
It was a bit different when you could take your SIPP at 50.
Personally I did a bit of both (though not enough) from quite a young age, and it was nice to know I could have accessed a wedge in my 40s when I was looking at investing in my business. There are a range of other reasons for people to regret tying everything up.
It was a bit different when you could take your SIPP at 50.
OutInTheShed said:
Unless she's a higher rate taxpayer, I would suggest considering am ISA, so the cash is accessible before pension time.
Personally I did a bit of both (though not enough) from quite a young age, and it was nice to know I could have accessed a wedge in my 40s when I was looking at investing in my business. There are a range of other reasons for people to regret tying everything up.
It was a bit different when you could take your SIPP at 50.
This is a very important consideration for someone so far from retirement age. Even for a personal plan the government stipulates the age you can collect it and it’s only going up. In 40/50 years time it could easily be 70 years old.Personally I did a bit of both (though not enough) from quite a young age, and it was nice to know I could have accessed a wedge in my 40s when I was looking at investing in my business. There are a range of other reasons for people to regret tying everything up.
It was a bit different when you could take your SIPP at 50.
On the flip side if your plan can be set by your 40s you will have money to spend that would otherwise go into a pension at that time.
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