Stakeholder Pension...for a child

AUSTIN_3 · 18 September 2004 at 2:31PM

I have been given advice by an indendent fininacial adviser to set up a stakeholder pension for my 2 yr old son, adding his child allowance to this each month and when my son is 18 we can stop paying into and he will be set up for life.....

Milarky · 18 September 2004 at 2:56PM

Yet weirdly, you cannot take out an ISA for a child [min age is 16] ....

This is to be addressed through the 'Child Trust Fund', I understand, but it remains unsatisfactory that the government allows a big 'loophole' like this one over stakeholders whilst being tight ar*s*d about other 'basic' savings... [remember that childrens' savings - even though they receive an 'adult' personal tax allowance and cannot work - cannot earn more than £100 a year in interest or else they will be taxed as part of the parent's income]

dunstonh · 18 September 2004 at 3:19PM

I have a number of grandparents that make contributions into their grandchildren's stakeholder plans to utilise the gift allowance to reduce the IHT liability. At the same time they have the view that they are paying into a plan that the grandchild cannot touch until they are reaching retirement and that they will still be remembered long after they have passed away.

Robert_Sterling_3 · 27 September 2004 at 12:24AM

I have been given advice by an indendent fininacial adviser to set up a stakeholder pension for my 2 yr old son, adding his child allowance to this each month and when my son is 18 we can stop paying into and he will be set up for life.....

I do not think he will be "Set up for life".
Perhaps it would be better to make it available to him at 18 to help him through Higher Education.
Higher Education might "Set him up for life".

plumb1_2 · 27 September 2004 at 11:25PM

You can take out a stakeholder pension for you son,i have 2 for my children
In opinion take out stakeholder out with a Mutual insurance company(weslyn,royal liver,liverpool victoria etc) and if the convert into a PLC,they will recieve a min of £500 for lost of voting rights.As all stakeholder funds are only allowed to make 1% charge for their services

dunstonh · 27 September 2004 at 11:37PM

You can take out a stakeholder pension for you son,i have 2 for my children
In opinion take out stakeholder out with a Mutual insurance company(weslyn,royal liver,liverpool victoria etc) and if the convert into a PLC,they will recieve a min of £500 for lost of voting rights.As all stakeholder funds are only allowed to make 1% charge for their services

upto 1.5% from April and any demutualisation would depend on you chosing their with profits fund. A long term investment like this would be daft going into a with profits fund.

I know this thread is all pensions pensions pensions but :

have been given advice by an indendent fininacial adviser to set up a stakeholder pension for my 2 yr old son, adding his child allowance to this each month and when my son is 18 we can stop paying into and he will be set up for life.....

You could consider looking at the Childrens trust fund (CTF) being launched in April 2005. Your son is already potentially going to get £250 from the Govt (if born after Sept 2002) and you can add to this upto £1000 per year. The fund itself doesnt become available until 18 and the growth and maturity is tax free.

Ideally doing this and the pension would set your son up. What is a house deposit going to be in 20 years time? What is university going to cost in 20 years?

The CFT covers the late teens/eary 20s issues. The pension covers 50 years later. And it will be 50 years later by the time your son gets there. Indeed, it could be longer!

Robert_Sterling_3 · 28 September 2004 at 2:23AM

Paying into a pension that someone might draw in about 63 years time is not something I would contemplate doing.

Pal · 28 September 2004 at 11:36AM

I would contemplate doing it but only if I had nothing better to do with the money. Most people should be more worried about themselves first before they worry about their children's retirement. Everyone's own priorities should be to have enough money themselves to cover:

- Short term debts for unexpected redundancy or ill health
- Long term savings for retirement (e.g. pension funds)
- Long term savings for care costs in old age
- Long term savings to make sure you actually enjoy yourself when you retire
- Savings to allow you to retire early if you want instead of having to work until you are 70.

Once you have covered that lot, if you want to do something for your children, save for their tuition and university fees, driving lessons, first house deposit & wedding costs. If you have any money spare after that lot (!) then by all means set up a stakeholder pension for your kids.

cloud_dog · 28 September 2004 at 3:13PM

I have been given advice by an indendent fininacial adviser to set up a stakeholder pension for my 2 yr old son, adding his child allowance to this each month and when my son is 18 we can stop paying into and he will be set up for life.....

Am in a similar position (have a 5 month old girl - blessed with riches beyond money).

Cannot decide what to do wrt the longer term. We have opened up a savings account for her with Nationwide (for her money plus and birthday / Xmas gift money - claiming gross interest) and hopefully as she grows she will gain an understanding money and how to live with / without it. For the time being we are using some of our Stocks / Shares ISA allowance and are putting £50 pm into a fund for her. This way it has exposure to (hopefully) better longer term returns whilst having the flexability to withdraw / stop / re-invest elswhere if we wish to. I know this approach raises tax considerations should we just give £nnnn pounds to her at some point in the future but I'm sure we can work round any constraints.

dunstonh · 28 September 2004 at 3:33PM

For the time being we are using some of our Stocks / Shares ISA allowance and are putting £50 pm into a fund for her. This way it has exposure to (hopefully) better longer term returns whilst having the flexability to withdraw / stop / re-invest elswhere if we wish to. I know this approach raises tax considerations should we just give £nnnn pounds to her at some point in the future but I'm sure we can work round any constraints.

Wont be an issue as its in an ISA and you will no doubt cease that in favour of the CTF next April.

cloud_dog · 28 September 2004 at 8:40PM

The issue of gifting money will need to be considered.

Have to admit that I've not visited the Inland Revenue web site to check (will do when it becomes relevant) but I think there is a limit of £3000 to 'gift' to children (??) in a financial, you also have to live for another seven years - otherwise they face tax considerations.

As I said haven't really looked into the tax issues yet (not sure its really relevent for another 15, or so years), but will do when I need to.

Regarding the CTF, again I'm not exactly sure what to do with that. I'm a big fan of investing with partuclar Investment Managers, and often follow them if they move funds, so the question for the CTF is who will be providing them, who will the managers be, and what / where will the investments be made. Obviously I'll take the money the Gov't will deposit but wrt extra money I think I will be guided by good investment stratey/managers and if that isn't offered by the CTF managers then I'll continue to put my money elsewhere.

Hopefully the CTF's will allow a degree of choice / flexability but, until more details are available (providers, etc) I'm not banking on CTF's.

cloud_dog

Stakeholder Pension...for a child

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