Junior pensions

[KirriIrry]

Hello,

Could anyone help me with junior pensions please?
I’m not massively financially savvy and also pretty disorganised, so I need something easy!
I have a lump sum saved that I want to feed in over the next few years (timed till each child turns 18), and then I’ll pay a small amount in each month for as long as I can afford to.
I assume it is ok to change the monthly amount, and to stop paying in at all if necessary?!

Can anyone recommend a good one?

Thanks

I’ve just opened one for my LO. You can pay in a max 2880 a year which is topped up with tax relief at moment to 3600. You can do this via a lump sum and/or monthly amounts and can stop paying in at any time. However important to understand that if you stop the growth maybe eroded by fees if the pension is small, and that currently they can only access at 55 rising i think to 57 and possibly will go up again in future years.

If you are happy for this to be a long term start for them go for it, but maxing out your ISA allowance and then theirs maybe better as you have more flexibility to be able to give them money sooner to spend on uni / house / life which could be more beneficial for them long term.

that said we have opened a SIPP but using it alongside a stocks and shares ISA so we have something to give sooner at 18 and then a little start for them pension wise.

@Minnowmeow Thats really helpful - thank you so much.
can I ask who yours is with?

Ours is with SJP but only because we have other investments with them. I would not recommend engaging with them just to open a SIPP. We did look at other providers and AJ Bell, Hargreaves and Fidelity all looked ok fee wise but that was a while ago so recommend doing some research now on the fees.

I’ve just opened one for my LO. You can pay in a max 2880 a year which is topped up with tax relief at moment to 3600.

What is a junior pension?? I've never heard of this before.

https://www.mumsnet.com/talk/investments/5352330-do-you-have-a-sipp-for-your-dc?reply=145970051

Thread about SIPPs recently.

Ours have both JISAs and JSIPPs with Hargreaves Lansdown. They’ve been really easy to deal with so far. Agree with others that balancing between the 2 is my preferred option - I don’t think you can pay into either for them after 18, they will move to ISA and SIPP in their control at that point.

Ours have both JISAs and JSIPPs with Hargreaves Lansdown. They’ve been really easy to deal with so far. Agree with others that balancing between the 2 is my preferred option - I don’t think you can pay into either for them after 18, they will move to ISA and SIPP in their control at that point.

Although the accounts will move to be adult accounts from aged 18 you could still contribute into them although you might need to gift cash to them to do so depending how the particular provider’s funding process works.

You can open a Self invested Pension plan (SIPP) for children. It’s obviously a very very long term investment for them so not for everyone but you do get top up from government and if fortunate enough to be able to put a little away for kids it can be alongside say a ISA a good way of helping them for a the future.

Ah thanks, I tend to max out their ISA every year but had never heard of a junior pension before! I don't have money for both so I will stick with the ISA as I think a house deposit is more important than the pension even though they get the 20% government top up with the pension.

Do you have your own pension provisions / house sorted? Are you happy for these savings to be passed fully into the control of an 18 year old?

We don’t save into our DC names. One wayward year / controlling relationship at the wrong moment and those are gone . Unless your own house, pension and isas are at their limits I’d advise caution.

Yes my pension and ISA is also maxed out to the annual limits.

And I agree it is a risk that they go rogue but not much I can do about that if that happens. They are 9 and 12 and fairly savy with money so far as I drill it into them. Eldest has his own Revolut and manages his pocket money well.

Pensions are fairly safe though aren’t they? Even in their own names, they can’t do anything with them until their reach pension age can they? Other than stop paying in, I guess.
mine are fairly well provided for in the shorter term which is why I’m looking at pensions, but also to safeguard against rogue years etc, as that’s not really in my control. I just don’t want them to have more money at an earlier age that they could just waste!

I’ve used virgin money for my kids

Depends on the funds you want access to. I max out my 2yo DDs every year and will to 18, went with Fidelity

I think they can cash them in early if they wanted, paying a penalty to do so. Check t&cs carefully.

i know no one can believe it of their child or pre teen but I’ve seen enough ‘DC has gone off the rails’ posts from parents who’ve scrimped and saved, and there’s sweet FA they can do once the child turns 18.

I strongly agree with this.

Oh, no - I believe it. Ad it doesn’t even need to be a ‘gone off the rails’ situation - my eldest can spend money like water. There’s still time to turn it around, but I certainly don’t want her to have control of a reasonably large sum of money at 18. It’s one of the reasons I’m looking at pensions instead. But I am also in a situation where benefits aren’t relevant now but could be. So having too much in the way of savings in my name that are actually for the children isn’t ideal either. It’s a fine balance, and I thought a long term investment like a pension might be the answer.