Do you have a SIPP for your DC?

[Bluebluetuesday]

Having read about this a few times lately, it got me wondering. Is it worth starting one, will there be so many changes implemented by various governments along the way they'll end up disadvantaged by having one?
Do your DC have one, who with? I think I've read too much and now can't decide whether to start some and invest a small amount each month.

Have recently opened a JSipp and after loads of research have gone with Fidelity.

I have one for each of my youngest children with fidelity and I save £25 per month into both. It will grow into a decent chunk by the time they are able to access it, the time being a key part of this type of investment.

How much are the fees on £25/month @Alltheusefulitems?

Every fund is different, so you need to watch out for that

My year to date fees are 0.23p per account

Oh that’s great @Alltheusefulitems! Which firm/plan are you with? I’ve been reading about HL, AJ Bell and Dodl etc but it’s still all quite confusing.

They're fidelity junior sipps. I did some research in to fees and they came out the best plus I find the website easy to navigate.

I recall someone saying every £1 into a pension for a child when they are born is worth £88 when they retire, on average and based on historical stock market data of course. Though that was probably nominal.

The power of compound interest: a 7.2% a year return means the pot doubles every decade.

This works in reverse too and is why back in the 1980s women were encouraged (in some quarters) to work so the family could double the mortgage payments from day one - so the house got paid off in 7.5 years instead of 25 years.

Yes I started JISAs and JSIPPs when they were younger (wish I'd started sooner) and when they turned 18 I started LISAs because you get the 25% uplift but they are tax free on withdrawal unlike SIPPs.

I'll put in as much as I can for as long as I can but DD has started full time work and has a DB pension and will be using up her full ISA allowance so I can't put any more in there. Now thinking about GIAs for them. All in global index trackers.

Will also give them a big cash lump sum for a house deposit and after that they will have to stand on their own two feet.

Yes I was with Fidelity when they were under 18. Really nice platform. They were invested in Fidelity Index World which has 0.12% fee and has done amazingly well over the years. If I recall correctly I think they were up 100% before we moved to Vanguard when they were 18. Now with InvestEngine which I really like.

I wish I'd started investing in my teens but access to information was a lot harder back then compared to now with YouTube etc.

Another with £25 a month going to fidelity, I would love to put in more but we have a number of other investments to focus on too.

Yes. £50 a month each. As others have said the idea being to give it as long as possible to compound. I saw somewhere that their generation will need £3m in their pension pots 😱

I would echo the low fees with Fidelity.
They don't charge a platform fee for Junior SIPPs. If you choose funds - unit trusts and OEICs (rather than ETFs and individual shares) they don't charge dealing fees either. So the charges are just those within the funds.
Take care with the choice of investments though because with an ETF or individual shares they will charge £7.50 per trade - buying or selling - even on a Junior SIPP.

I opened a Junior SIPP for my dc when he was a toddler.

I do think LISAs could be a better option as a retirement product for basic rate tax payers. You get the 25% government top-up; they are tax free on withdrawal at 60; and they can also be used for a first house deposit.

So a mix of SIPP, and JISA in the early years, but once dc reaches 18, start to filter any saving for them outside of these into their LISA.

Part of the reasoning for this early preparation on pensions, is that much of the lack of awareness and inertia that leads to procrastination when a young adult can be overcome. It can seem confusing - so having one already set up and growing by age 18 is then an easy transition for dc to start contributing when they can.

Very much agree. We've switched to LISA which is better for BR taxpayers than SIPPs.

DCs are very switched on about saving and investing, it's a life skill that everyone needs to learn.

I plan to get SIPPs set up for DV by tend if the tax year. I have maxed out their JISAs this year. As others have said, I want them to have a pension ‘ready to go’ to start investing in, to benefit from the compounding and the gov contribution.

In my view, we need to talk more about saving with our kids, and demonstrate the benefits and how it works. You see so many comments on here from adults who don’t understand how it works so we have a responsibility to teach our kids sound financial management.

im not sure which platform to use for them sipps , currently have HL myself but aware their fees are high. Kids isas are in Vanguard but ironically would have no fees if they were in HL!

No, none of us know how long we will live or where we will live, sipp’s are inflexible plus laws change. I put money into high interest savings for them and their father has gifted them isas from sale of house

What interest rate are you getting? The money will be lose its value over the years due to inflation. Unless you're getting 8% interest pa in which case you're ok but you generally only get that sort of return on equities over the long term. The last few years I've been getting 15%+ pa on my investments.

Yes, we have a JSIPP with Fidelity for our 1yo. We put in the max for her first birthday present from us 😂

Generally we are just saving as normal in our own names - unless you use up all your own ISA and pension allowances (between you and DH), it isn’t really tax efficient to prioritise saving in DC’s name imo. We also don’t want DC getting access to lots of money at 18 just in case 😂

We may put more into the JSIPP in future - it’s not a priority but couldn’t resist bunging some in as DC is so young.

By the time they could access a SIPP they can reasonably expect to have decades of contributions into their own work pensions, probably a full state pension, and it’s fairly likely that as they enter their own retirement they may well have inherited from deceased parents. I don’t understand why parents of young children feel their offspring should not be responsible once they are working adults for their own pension planning. If you’ve money to spare I suppose help with school fees, driving lessons, even help towards a house deposit, but seriously, these children really don’t need spoon-feeding all their lives.

My AC are all in their 30s, earning excellent salaries I could never have dreamed of, with (large) mortgages on fabulous homes, and affording pretty much whatever they want. It seems quite absurd that I or their dad should have funded their retirements 30 years hence, they can expect us both to pop our clogs by then and they’ll sell our houses. They won’t be struggling.

How investment savvy do you need to be? I have a workplace pension and just picked whichever risk profile seemed like the right idea and tell my employer what % I want to pay in and don't think about it beyond the annual statement.

When ive looked at junior pensions (DC with a disability, not likely to affect lifespan but may well affect ability to live/work independently) I've felt v intimidated by my own lack of understanding and financial education and have never done anything about it. But it seems like a sensible option thay i really need to sort, given our situation. We're not big earners, but can afford to siphon off some each month without starving ourselves. DC already has a savings account which a good % of DLA goes into (although this has had a hit recently in terms of private medical costs) and 25 quid a month goes as premium bonds

That's true but if you have spare money why not? I started JSIPPs for DCs and JISAs and LISAs.

I don't really contribute to them any more (apart from gifting as part of IHT planning) but they were good as conversation starters with the DC about the importance of starting to invest as early as possible to allow time for compounding.

When the DC can see the returns for themselves it encourages them to keep saving and investing. DD has graduated and is working and contributes every month to her ISA.

Can I ask what you are paying in? Do you have to put in an initial lump sum, and if so, how much?

Yes
We have them for our 1 and 3 yr old.

Unless we have put 40k in our isas the Jisas only get minor money added.
Handing an 19yr old 200k is a often a bad idea

The whole point is you have adult children in their 30s.
Look at the 20 yr olds graduating and their job prospects.

The last 3 companies I have worked for now no longer hire anyone with less than 5 yrs experience. Do the maths.
People with young children need to prep for a very different climate.
The wealth gap is coming.