Pension for your children?

[steliosdisappeared]

If you could afford it, would you do it?

With children with HF ASC - and the potential precariousness of any future employment - I'm thinking this might be a worthwhile investment..

Although there is a part of me that wonders if children who get such handouts make less effort to get their finances organised / to actually save some of their income? (If it's even possible). Would this small cushion reduce that DRIVE to earn / save etc and in anyway reduce someone's feeling of power over their own destiny?

Well done if you're still with me...

I think it's a good idea. I believe that "nudge theory" research has found that getting the ball rolling in a way like this makes it more likely that people save for retirement because the biggest barrier is getting started. If you can afford it as well as making your own savings then please do!

We set up a pension for our 2 DC when they were tiny.

We pay in every month.

They can't cash it in until they are 50.

I have. I pay in a small amount each month. It just means that they (and I) don't have to worry about what happens in the future to a state pension. And the earlier they start saving the better...

If you can afford it, do it. Stakeholder pension with very low charges and 100% equity exposure. It gets 20% bump in form of a tax rebate as well - can't recall the max amount you can put in but google will help.

My kids have 25k plus in each of their pensions except my six year old who has a bit less. That's 25k they don't have to find out of income they will struggle for and 25k more they can use from their own income. And if they earn more than us we'll it isn't as if we needed the money so no matter, they will inherit it anyway and through a pension it means our estates will pay less inheritance tax.

Short term funding for university will be from their child ISAs so the pension is truly long term savings. This money might get blown and affect short term savings incentives but the pension won't build up to enough to live on unless they keep paying in over their lifetime.

If you can afford it... although I'd prioritise help though uni and onto the property ladder.

They can't cash it in until they are 50

If you're in the U.K. that'll be 58 now (changes coming in 2028)

Stakeholder pension with very low charges

'Wise'dad strikes again. Stakeholder pensions are now more expensive than personal pensions. Do not touch them. They are restricted, restricting and no longer relevant.

I agree, nudge theory supports it. However NEVER save in your kids pensions unless your own is very well provided for. You can now leave your pension to your kids if there's money left, but you can't access theirs whatever happens. Pensions are outside of your estate.

Ok so to summarise

1. due to nudge theory children's pensions might start the pensions savings ball rolling.

2. choose a personal pension rather than a stakeholder pension for greater flexibility

3. do the above only so long as your own pensions and your children's university / property aspirations are catered for.

Can anyone recommend a personal pension company for a child please?

I personally prefer ISAs as you can have instant access as and when required. I know many people who don’t have pensions at all but instead save 20-30 per cent into stocks and shares ISAs and have managed to save hundreds of thousands of pounds.

DD has a children's SIPP with Hargreaves Lansdown. She also has a S&S ISA with them. I pay a small amount monthly into her SIPP, all birthday money etc goes into her ISA.
I'm hoping that starting a pension so early will mean she has more choices later on. I read that a contribution of £30pm, every month for the first 18 years, will grow to a pot of £100k by retirement age - that's without any further contributions. (obvs investments can go down as well as up).
I don't plan to tell DD about it until she's working, then she can take over and keep it going.
ISA's don't benefit from the government contribution to them, it's just tax-free interest.

We use AJ Bell youinvest for our SIPPs. The fees are very low but you'd need to compare with eg Hargreaves Lansdown as different platforms work out better depending on the amount invested.

Obviously, you need to manage it and make own decisions as it is a SIPP.

If managing your own doesn't appeal, then you could approach a couple of local IFAs.

I know many people who don’t have pensions at all but instead save 20-30 per cent into stocks and shares ISAs and have managed to save hundreds of thousands of pounds

£100 ISA = £167 in a pension (guesssing they are HR tax payers if saving hundreds of thousands)

Compounded returns on that extra money (even if only basic rate). Outside IHT estate, can pass to children, can pass to spouse, can take 25% tax free and draw a flexible income to ensure tax efficiency.

Hmm.. not sure I'd be discounting pension too quickly. Flexible access is one thing, missing an opportunity is another.

Last time I checked Fundsnetwork was the most competitive for children's pensions. Hargreaves Landsdown tend to be quite expensive as platforms go. They are a marketing dream though.

Thank you, i'll look into those.