Pension for student

[Tumbledowntree]

My DS is likely to be a student for several years. First year of 4 yr degree then hopes to do PhD (early days I know)

generous grandparents are funding undergraduate degree (tuition fees and living costs), his dad is giving him maximum amount to put in Lisa for house deposit each year

DS has 50k in premium bonds and similar amount in isa/ savings

I wanted to do something long term and I understand anyone can pay up to £2880 into a pension. I think this would be good long term as they are unlikely to put anything in a pension for 6/7 years.

can anyone advise what sort of thing I should be looking at? Thinking about charges etc. I think I would be aiming to put £100 a month in to start.

thanks for any pointers

hargreaves lansdown do ready made pensions, i have one, put 100 a month into, wont be main pension so its an extra.

I use Vanguard Investor but many providers offer a low cost Self Invested Personal Pension (SIPP). Dodl, Vanguard Investor, Hargreaves Lansdown.

The current provider of the LISA may offer a SIPP. that would keep it easy.

My DCs are only 8 and 5 but they have SIPPs with AJ Bell. Our ISAs and my own SIPP are with AJ Bell too; having everything under one roof makes it easier for me as I can manage all the accounts from a single log in and view all the different accounts as one portfolio.

You're dead right to concentrate on charges, because these will eat into total returns over the decades and everything else being equal is the one thing your DS can do to boost his returns. If he manages it himself in a SIPP then he's obviously not paying a professional manager, so he needs to look at the prover's monthly/annual fees and dealing charges.

AJ Bell's charges for shares are 0.25% but max out at £10 per month. There is a fund charge as well but there are no funds in the DCs SIPPs. There are dealing charges too (£5 and £3.50 for infrequent/frequent respectively), but with the SIPPs I'm putting one lump sum in and only trading a few times a year - if you're drip feeding £100 a month then this might be more important. At the moment both my DCs SIPPs are invested for growth and split between Scottish Mortgage Investment Trust and some Vanguard index tracker ETFs.

You DS can indeed put up to £2880 per tax year into a SIPP, but even if he has no income it's regarded as from post-tax income so the SIPP provider will also claim tax relief at 20%. This means that if he puts the full £2880 in there will be an additional £720 reclaimed from HMRC, so the total amount will actually be £3600.

Pensions can be accessed at 55 at the moment, but this will change to 57 soon. I dare say the minimum age will be higher still by the time your DS is approaching retirement age. I would say that pensions aren't for everyone at this age, especially if they are likely to need the money sooner, but if your DS has plenty outside the pension system then a SIPP is a bit of a no brainer - 40 odd years of compounded growth, plus the tax relief, will make even small sacrifices now worth a fortune when your DS reaches retirement age.

Thanks everyone. Lots to digest. Unfortunately his Lisa is with Moneybox and they only take in pensions that have already been set up.

I like the look of AJ Bell as charges are low. Not heard of them before but they seem really good

I’ve got a final salary pension and I wish now I had started it earlier!

and as @InveterateWineDrinker says 40 years of compound interest is not to be sneezed at!

I use AJBell for 3 SIPPs for adult kids and put the £2880 in. They are one of the cheapest and have a wide range of investments to choose from.

A vote for HL here.