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Pension for 24 year old

1 reply

Thinkpositivethoughts1 · 05/09/2024 09:54

I’d like to help DS, 24, start a pension with a contribution of £5,000. He’s training to be a barrister, so self employed. He’s based in London and when he buys a flat in a few years I’d expect it to cost more than £450,000, as I’d contribute to his purchase.
Is it worth getting him a Lisa, with the remaining £1,000 elsewhere or should he put all £5,000 into a SIPP?

OP posts:
nannynick · 05/09/2024 10:08

He won't use a LISA for a first time home purchase.
He is unlikely to be a lower rate tax payer or very long.
So he should be looking at a pension he can easily manage online, which he would use when he is a higher rate tax payer, as well as now.

If he had a LISA which had a little in it, he is stuck with that until age 60. If he was not adding to it on a regular basis, the fees on a Stocks & Shares LISA may eat into the money, and if things go badly for a few years it could erode it a lot.

I would do a SIPP which he pays into now and will pay into in the future.

You would be gifting him the £5k and he would then use that to open his SIPP. His profit this tax year must exceed £6,250 for him to be able to pay £5k into SIPP.

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