Hasanyone set up apension for their kids?

[moondog]

Any Any thoughts or pointers?

I feel guilty enough that I haven't set up a fund for DD's University Fees! (she's 4)

No, no pension from me either. I'm assuming that she'll be brought up with enough wits to think this is the right thing to do for herself.

OTOH, we spend plenty enough money enjoying the here and now. Fresh airs and frugality is fantastic and all that but sometimes we all enjoy the material things in life.

Can someoone please excplain what "seen a few clients who put the £3,600pa in" means? Is this something to do with a pension limit - it did n't seem to be made in the context of ISAs? Thanks

I think an even bigger favour I can do for my children is to cover my own pension and nursing home / healthcare costs in retirement.. I wouldn't want them burdened with any of that. So any spare cash I have now will be invested with that end in mind.

I started one for DD 10 years ago because I wanted her to have savings that meant she would be ok when I was dead and gone and everything else I figured she could blow when she was 18 and I have to sign it over to her.
Anyway we set another up for DD2 and then I realised that actually with all the fee's the £20 a month wasn't going very far at all so I stopped.
I still think the theory and intention is a solid one though.
I like to think of the children receiving a little something when they are 70 and thinking of us.

Man I am too skint to even be READING threads on Mumsnet LOL. Seriously though, what an interesting and thought provoking thread...

Lindy you sound like my parents, both of them worked hard all their lives and saved up so they had a pension and afford to give me and my siblings the deposit for our first houses. However I do remember my childhood as being quite dull we hardly ever went on trips or holidays I use to really look forward to school trips as a result!) and had to make do with other peoples hand me downs, Xmas and birthdays held no real enjoyment as the desired present rarely turned up and treats were few and far between. When I went to university I blew my first grant cheque on new clothes, shoes and partying I'm sure a big part of that was as a result of my parent's parsimonious attitude to my upbringing. I don't blame my parents as they grew up during the war and lived through real hardship and their attitude did instill in me a great respect for money and saving.

With my own dc I work hard to ensure they have a good education and to respect money I hope the combination will mean they can look after themselves financially when they are adults. If I can afford to help them at university or with house deposits then I will do so but it won't be a given.

We have lots of trips out and a couple of holidays a year, we regularly eat out in inexpensive restaurants and I'm not afraid to say if we can't afford something they want but they're given pocket money for helping out with household chores and they spend it on comics,tat etc. They always get a couple of the things they've asked for at xmas & birthday and most of their clothes are new ( a vg friend gives me some great hand me downs). Given the choice I would have prefered my parents to have spent more money on us as children and let us find our own house deposits.

@stressed2007
for 2009/10 tax year (ending 6 April) you can put £3.6k into a cash ISA, or £7.2k into a stocks & shares ISA (or up to £3.6 + £3.6 of each if you want to have both). THe allowances change upwards for 2010/11.

@blueshoes
"ISA is perfect for a child " No, you have to be 16 to open a cash ISA, 18 for a stocks & shares ISA
re setting up pension for a child, or non earning spouse: - the contributor can get tax relief on payments into the fund otherwise what would be the point.

General trustafarian comments re children & pensions. No, they don't get to blow it all on Itunes at 18,it's a pension. Pensioners are OLD people.

We have set up pensions for all of ours. Pay in around £2800 per year each into the fund (IIRC). Basic rate tax relief is applied to this at 22%, meaning that £3600 per year is invested in total. Theoretically, investing every year from the child's first to eighteenth birthday will lead to a bigger pension pot than would investing evey year from 18 to 65.
I think our children will lead more difficult lives than we did, so don't resent trying to help them at all. I attended university with a full grant and no tuition fees and was able to buy my own first home in my twenties. If my children go on to university thay are likely to face huge fees, need take out a student loan and I can't imagine how they will ever be able to buy their own homes (at least, not if they stay nearby where the cheapest home costs around £250k).
Setting up pensions now means (hopefully) that they won't need to make large pension contributions from their wages when they are starting out in their working lives.

YY cat

The appeal of setting up a pension fund for my DCs is that it would take away one more worry for them.

But then, y'know, where does it end? Already I feel obligated to fund their education and something to help them with their first properties. This pension idea is nice but not really necessary. Will I feel obligated to help them with their children's school fees? Holidays? There comes a time when children should be financially independent and live the lifestyle borne out of the choices they have made themselves.

considered it but decided it was too inflexible/wasn't sure we had enough money for ourselves. Did invest 1000 in a children bond for when they were 21 but the interest rate is rubbish.

Once they reach 16 they can have an ISA and that can be used later to help them towards a home. Only snag with that is they won't be entitled to benefits should they have a problem finding work.

Children didn't know for years that we had some investments for them. They learn only when they show signs of being mature enough to realise they have to work for a living.

I save DS's child benefit in an ISA in my name which we call his 'college fund' - no idea what it will be used for eventually but basically we put £80 a month into it and leave it to its own devices.

Obviously if he chooses to go to college it will be put towards that, or it could be used as a deposit on a house. But since it's in my name, he won't be blowing it on alcohol and drugs on his 18th birthday!

As far as pensions go, I'm more worried about mine than his TBH...

I'm more concerned about DD getting on the housing ladder. Our DD is 5 and we are buying her a house. It's also an investment for us. Hopefully, the rental income will pay the mortgage off over the next, say, 13 years. Then she can live in it if she goes to university in the same town as the house. When she's working she can pay us an nominal rent to supplement our pensions, or sell that house, use the money to buy a place of her choice and pay us rent. Clear as mud, eh?

That's the plan, anyway.

Too inflexible for me - I'd like DD to be able to access money if she needs it for a property, for example. So we have made other investments rather than a pension a bigger priority.

Once I think we've put enough in those, then I'll think about a pension for her as well...

Very interesting thread, as I had heard about this recently and have been vaguely wondering about doing it for 1yo DS.

I think it is interesting that, given our parent's generation could often count on a decent final salary pension when they retired, some of our generation will have at least some of that and still a state pension, the idea that it is "spoiling" our dcs by trying to remove a worry that many of our parents didn't have seems a bit odd to me.

Knowing you've got the basis of a good pension at 60 isn't going to stop you having to work today for anything you need/want, is it?

The inflexibility was the main attraction for me, I don't like the idea of buying them a house, them marrying and somebody else being entitled to take half of it because it's a visible asset. The idea with the pension was that they wouldn't know they had it until they were able to draw it and hopefully they aren't still being messed around by blokes at 65.

Leningrad makes a good point you can get so wrapped up in their lives and all the good you want to do for them, you forget to have your own comforts.

LeninGregg - you're right, of course! I was just chatting to DH about it, and agreed we need to think about what we want to save for ourselves and then what we want to save for DS. It's about getting the most out of what you have, really, I guess.

The attraction to me of the pension option is that, because you'd be investing over such a very long term, I read that paying in a relatively small amount (£80) per month from 0-18, could generate a pension pot of £4m by age 60. I don't know the basis of those figures (read them in Prima magazine ), before anybody jumps on me!

And I know that my MIL has to pay in about half her salary now towards her pension as she lost out by getting divorced 20 years ago and having a big break in employment while raising kids.

So you could do what one of the other posters has done and pay in the child benefit (if you can afford to), or the DC will need to pay much higher monthly payments once they start work. So I think it is a wise investment choice if you have the cash spare.

But we're planning to talk to an IFA (rather than basing our financial futures on something I read in Prima )

MillyMollyMoo I'm not sure you're right that pensions are outside divorce settlements now, btw. I'm pretty sure the law was changed on that in the past 20 years, so that people don't lose out as horribly as my MIL did.

x-posted with LeninGregg - I don't see childcare and old age provision as the same, since the pension is unique in your being able to pay the money in at a time when they can't being the key to everything.

Our financial advisor has set up a pension for his own child, so by the time he is 18 he won't have to save for a pension. But it's a bit inflexible for me as can't my son couldn't access it till retirement. We pay all our child benefit into a child trust fund and top up every year to the maximum limit