Anyone set up a pension fund for their children?

[blackandwhitecat]

I'm sure I read an article where some forward thinking parents set up a pension fund for their babies. I think you can just stick £100 or so in a stakeholder pension account then the kids can access it when they're 55 and it'll be worth considerably more. Anyone done this?

It's not really for people of average income, there are lots of ways to invest for your child if you have spare money. Babies get the Child Trust Fund which is doing pretty well so far, plus you could invest in a private health plan, dental plan, bonds, a studio flat (if you're really loaded) - all things that will benefit your whole family. I think it's a bit overzealous worrying about/paying for what your child will be doing aged 55 - they may not even deserve it then!

should really start myself a pension first i suppose

I think its fake security personally .. I remember when they were launched in terms of make your child a millionaire pensioner ... well really .. and just how much would £1 million be worth in real money in 65 years eh? .. diddly squat

I agree that if you have the money spare then you should put it in some kind of savings scheme or investment (property / art / antiques / wine / shares .. whatever) but actually locking it away for 55 years seems a little short-sighted to me

what happens if your child desperately needs the money at 35 (or any other arbitrary age) .. its locked away and they can't get it

Just another thing for IFAs to get commission on

I have to say if my parents had put aside £100 for me 35 years ago for me to access when I'm 55 I'd be nothing but grateful (it could help me look after them in their retirement if nothing else!). I've already got the Child Trust Fund and other funds saved up for my kids' university fees and though we're far from well off we can certainly spare £100 now and the odd top-up if it means a generous return for my kids in 50+ years. Most financial advisors would say it's never too early to think about your pension and the earlier you start planning for it the cheaper it will be long-term. So £100 now will could save my kids £100s in the future.

so can anyone tell me how to start my own stakeholder pension fund? im nearly 21 so still consider myself young, where i could put in varying amounts as im at home with baby till she goes school and i go back to work?

How weird to see long-term planning as SHORT-SIGHTED twig. Actually the article I read in The Guardian money bit I think said it was an excellent idea. And long-term financial planning is much more important for the not very rich than anyone otherwise you get left with the state pension and that's it. As I said we take a long-term view of our finances so this money (hardly a huge amout now but will add up to a lot in the future) is not INSTEAD of other savings (e.g. our own pensions) but AS WELL as. Don't know why so many people esp. women seem so against saving for pensions. Weird. And explains why so many esp women end up on the state pension or relying on their kids to fund them.

I'm not against baby pensions I just think it's for when you've got all your other bases covered. As I said, you have to have the money to spare and TBH most people, even of average income, have debts that ought to be paid off before thinking about investing in their kids' retirement.

I don't see long-term financial planning as short-sighted at all

However I think the concept of starting a pension fund for your baby is probably not the best .. the deal, I thought, was to put a regular sum away for them which they can then take over ..

if your child does not reach retirement age the money is not accessible by the family

if your child urgently needs the money at different stages of life ie education, first home, marriage, children, health .. any one of a myriad of reasons then that is also not possible with a 'retirement scheme'

basically if you have enough money so that all other options are used up (ISAs for parents) and you have savings / share / property schemes already then of course its a great idea

but personally, and I'm no great expert, I think they're a bit of swizz for the 'common man' really

I think Twig is wrong about the money not being accessible to the family if the child dies; the money would become accessible upon the child's death, but it might be taxed (to take back any tax shelter status it was given in the past). But def. there would be named beneficiary on the pension fund.

Littleducks, it's hard to suggest what you should do in a short message, and anyway I'm not an IFA so don't want to sound like I have expert knowledge. But I have been trying to sort all this out for myself, so am somewhat clued up.

In short, I think you should go to CAB and ask them for their guidance. Also, first pay off debts you have (before you worry about pension), and go for a stakeholder (that means low charges) if you go for any pension fund.

A lot of people are arguing that it's nearly as good if not better to save for retirement in ISAs, anyway. At your age you more safely could consider investing in a higher risk ISA (higher risk of losing some money, but also better chance of higher returns). Good luck.

oh she's right .. I'm sorry .. it goes to your beneficiaries as nominated (or spouse and dependents)

Take your point Twiglett, that their kids' pension is probably not the financial priority of most parents. BUT pensions are often ignored for exactly that reason by most of us - that they're not the most immediate financial priority when their are mortgages to pay and so on and then suddenly it's too late and you're left high and dry or left having to pay half your salary or more into a pension plan in your last few working years. What I think also most people don't understand is that the sooner you start paying into your pension the cheaper it is because you can pay less each year but get more back on it the longer you leave it. So the fact that my kids won't be able to access the money till they're 55 is a GOOD thing. And it's important to tie some money up for the future otherwise most people will always be able to find something to spend it on in the present and find they have nothing when it comes to the future. My thought is that not only will my kids benefit from whatever small amount I put away for them now but also they'll be encouraged to add to it as soon as they can.

No and we are hoping infact that they will be our pension fund!