Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • sunnyjim1234
    • By sunnyjim1234 6th Sep 17, 8:57 AM
    • 28Posts
    • 3Thanks
    sunnyjim1234
    Pension for Son
    • #1
    • 6th Sep 17, 8:57 AM
    Pension for Son 6th Sep 17 at 8:57 AM
    Hi,
    Back in 2005, I read a newspaper article about starting a pension for a child. It seemed like a good idea,my son was 8yrs old at the time, so I took out an Individual Stakeholder plan with Axa. ( The plan subsequently became a Friends Life plan.)
    My intention was, that on graduating from Uni, my son would take over the monthly payments and would have the benefit of a bit of a head start with his retirement planning.
    I never really took much interest in the funds performance, just set up a direct debit and forgot about it.
    My son is now half way through a PhD, so has spent longer at Uni than anticipated and is still not yet in a position to start making his own contributions. I'd like to think this will change in two years time, but you never can tell!
    My circumstances have changed recently and I am looking to cut my fixed outgoings, and would ideally like to cease paying the monthly contributions, but am concerned about how this plan will perform without regular contributions.
    The monthly contribution is only £80, so I could suck it up if necessary, I just wonder whether I might be better transferring to something like VLS 100
    Would be grateful for any thoughts or suggestions.
    Regards
    James
Page 1
    • jerrysimon
    • By jerrysimon 6th Sep 17, 9:13 AM
    • 251 Posts
    • 185 Thanks
    jerrysimon
    • #2
    • 6th Sep 17, 9:13 AM
    • #2
    • 6th Sep 17, 9:13 AM
    Lucky son!

    I would advise him to start paying it himself now even if it means a small part time job.

    Jerry
    • xylophone
    • By xylophone 6th Sep 17, 9:16 AM
    • 23,480 Posts
    • 13,652 Thanks
    xylophone
    • #3
    • 6th Sep 17, 9:16 AM
    • #3
    • 6th Sep 17, 9:16 AM
    An old fashioned product but fine for certain situations and quite flexible.

    https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/contract-based-schemes/stakeholder-pension-schemes?moreInfo=4

    It is possible to make very modest contributions to a stakeholder.

    Time for sonny Jim to take over and contribute £20 a month - gives him the chance to start taking responsibility for his future and helps him to consider his options when he starts work and has a workplace pension.
    • AnotherJoe
    • By AnotherJoe 6th Sep 17, 9:26 AM
    • 7,602 Posts
    • 8,204 Thanks
    AnotherJoe
    • #4
    • 6th Sep 17, 9:26 AM
    • #4
    • 6th Sep 17, 9:26 AM
    My circumstances have changed recently and I am looking to cut my fixed outgoings, and would ideally like to cease paying the monthly contributions, but am concerned about how this plan will perform without regular contributions.
    Originally posted by sunnyjim1234
    At this point, especially given your financial circumstances, that should be be his concern, not yours. He's a big boy now and daddy should tell him about it and hand over the documents and leave him to it.
    • sunnyjim1234
    • By sunnyjim1234 6th Sep 17, 9:27 AM
    • 28 Posts
    • 3 Thanks
    sunnyjim1234
    • #5
    • 6th Sep 17, 9:27 AM
    Pension for Son
    • #5
    • 6th Sep 17, 9:27 AM
    An old fashioned product but fine for certain situations and quite flexible.
    Originally posted by xylophone
    Thanks for your prompt reply.

    So you think the product is ok to stick with, but maybe reduce contribution level and encourage my son to continue to make the contributions himself.
    Regards
    James
    • sunnyjim1234
    • By sunnyjim1234 6th Sep 17, 9:34 AM
    • 28 Posts
    • 3 Thanks
    sunnyjim1234
    • #6
    • 6th Sep 17, 9:34 AM
    • #6
    • 6th Sep 17, 9:34 AM
    At this point, especially given your financial circumstances, that should be be his concern, not yours. He's a big boy now and daddy should tell him about it and hand over the documents and leave him to it.
    Originally posted by AnotherJoe
    Thank you Joe,
    Very succinctly put, as usual. You're spot on.
    Like you say, it's not really my problem, it's up to him to make the most of it.
    Just didn't want to see the pot gradually deplete.
    Regards
    James
    • AnotherJoe
    • By AnotherJoe 6th Sep 17, 9:49 AM
    • 7,602 Posts
    • 8,204 Thanks
    AnotherJoe
    • #7
    • 6th Sep 17, 9:49 AM
    • #7
    • 6th Sep 17, 9:49 AM
    Thank you Joe,
    Very succinctly put, as usual. You're spot on.
    Like you say, it's not really my problem, it's up to him to make the most of it.
    Just didn't want to see the pot gradually deplete.
    Regards
    James
    Originally posted by sunnyjim1234
    There's no way the pot should deplete ! It should still grow due to the underlying investments growing (obviously in the long term no doubt it can fluctuate though I know nothing about this particular plan.)

    . If the charges are high enough that that's happening then transfer it to a low cost SIPP or similar.
    • dunstonh
    • By dunstonh 6th Sep 17, 9:54 AM
    • 89,606 Posts
    • 56,105 Thanks
    dunstonh
    • #8
    • 6th Sep 17, 9:54 AM
    • #8
    • 6th Sep 17, 9:54 AM
    The monthly contribution is only £80, so I could suck it up if necessary, I just wonder whether I might be better transferring to something like VLS 100
    You havent actually said what you put in place to begin with. So, we cant say whether VLS100 is a better option without knowing what it may be better than.

    So you think the product is ok to stick with
    The old AXA stakeholder was available in two forms. It was also variable priced depending on where you bought it. So, again, without information we can't say.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • sunnyjim1234
    • By sunnyjim1234 6th Sep 17, 10:09 AM
    • 28 Posts
    • 3 Thanks
    sunnyjim1234
    • #9
    • 6th Sep 17, 10:09 AM
    • #9
    • 6th Sep 17, 10:09 AM
    You havent actually said what you put in place to begin with. So, we cant say whether VLS100 is a better option without knowing what it may be better than.



    The old AXA stakeholder was available in two forms. It was also variable priced depending on where you bought it. So, again, without information we can't say.
    Originally posted by dunstonh
    Thanks for your reply.

    Sorry to be so vague. At the time I started the plan I was taking out a new mortgage and I asked the mortgage adviser to recommend something suitable. Looking through the paperwork, all I can see is that the contributions were invested in the Lifestyle retirement fund(s) which was the default investment choice.
    Not sure if that means anything to you?

    Regards
    James
    • xylophone
    • By xylophone 6th Sep 17, 10:40 AM
    • 23,480 Posts
    • 13,652 Thanks
    xylophone
    Incidentally, you said your son was eight years old in 2005 which makes him only 20 now.

    You also say

    My son is now half way through a PhD, so has spent longer at Uni than anticipated

    Is he an exceptionally bright young fellow or is there a typo somewhere?
    • xylophone
    • By xylophone 6th Sep 17, 10:43 AM
    • 23,480 Posts
    • 13,652 Thanks
    xylophone
    https://extranet.friendslife.co.uk/pub/doc/documents/SHPG.PDF

    This is your plan?
    • sunnyjim1234
    • By sunnyjim1234 6th Sep 17, 11:04 AM
    • 28 Posts
    • 3 Thanks
    sunnyjim1234
    Incidentally, you said your son was eight years old in 2005 which makes him only 20 now.

    You also say

    My son is now half way through a PhD, so has spent longer at Uni than anticipated

    Is he an exceptionally bright young fellow or is there a typo somewhere?
    Originally posted by xylophone
    Sorry, my mistake
    Well spotted, he's 22 now so must have been around 10 back in 2005.
    Regards
    James
    • sunnyjim1234
    • By sunnyjim1234 6th Sep 17, 11:08 AM
    • 28 Posts
    • 3 Thanks
    sunnyjim1234
    Thank you very much, good of you to take the time.
    Regards
    James
    • dunstonh
    • By dunstonh 6th Sep 17, 11:23 AM
    • 89,606 Posts
    • 56,105 Thanks
    dunstonh
    Thanks for your reply.

    Sorry to be so vague. At the time I started the plan I was taking out a new mortgage and I asked the mortgage adviser to recommend something suitable. Looking through the paperwork, all I can see is that the contributions were invested in the Lifestyle retirement fund(s) which was the default investment choice.
    Not sure if that means anything to you?
    Originally posted by sunnyjim1234
    That would almost certainly make it the Saver version of the AXA stakeholder. A poor quality option with just one fund (a lifestyle fund). Nearly always set up at 1.0% AMC although the potential to get discounted did exist although rarely used as most of these were sold through the AXA tied salesforce and not IFAs (if an IFA wanted to use the AXA stakeholder, they would have used the other version that AXA had available)

    That product is no longer available for new business but can be topped up.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • sunnyjim1234
    • By sunnyjim1234 6th Sep 17, 11:39 AM
    • 28 Posts
    • 3 Thanks
    sunnyjim1234
    That would almost certainly make it the Saver version of the AXA stakeholder. A poor quality option with just one fund (a lifestyle fund). Nearly always set up at 1.0% AMC although the potential to get discounted did exist although rarely used as most of these were sold through the AXA tied salesforce and not IFAs (if an IFA wanted to use the AXA stakeholder, they would have used the other version that AXA had available)

    That product is no longer available for new business but can be topped up.
    Originally posted by dunstonh
    Thank you very much.
    So presumably it is worth considering other options?
    If so,would I be on the right track looking at VLS?
    Regards
    Ian
    • dunstonh
    • By dunstonh 6th Sep 17, 11:51 AM
    • 89,606 Posts
    • 56,105 Thanks
    dunstonh
    If so,would I be on the right track looking at VLS?
    The AXA lifestyle funds start with 100% global equity and then worked down the risk scale over time. VLS100 is 100% global equity but always remains 100% global equity. Loss potential is 50% over 12 months. So, very high risk.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • sunnyjim1234
    • By sunnyjim1234 6th Sep 17, 12:26 PM
    • 28 Posts
    • 3 Thanks
    sunnyjim1234
    The AXA lifestyle funds start with 100% global equity and then worked down the risk scale over time. VLS100 is 100% global equity but always remains 100% global equity. Loss potential is 50% over 12 months. So, very high risk.
    Originally posted by dunstonh
    I appreciate what you are saying regarding risk, but with a 40 year investment horizon I don't think it is unacceptable. Maybe time will prove me wrong, I hope not. I imagine the existing fund is still equity heavy? So there wouldn't be much change there, and more diversification must be a good thing, as are lower charges.
    The idea of this plan was to kickstart his retirement planning, I know there will be market corrections and crashes along the way, thats only to be expected.
    I would hope he would not lose too much sleep over market volatility.
    Many Thanks again
    James
    • kidmugsy
    • By kidmugsy 6th Sep 17, 3:04 PM
    • 9,853 Posts
    • 6,645 Thanks
    kidmugsy
    At his age he might be better contributing not to a pension but to a LISA. That might help him buy a property at age (say) thirty. He can pay into a pension when he starts getting an employer's contribution.

    He can afford to defer paying into a pension because good old Dad has given him a flying start.
    • sunnyjim1234
    • By sunnyjim1234 6th Sep 17, 4:36 PM
    • 28 Posts
    • 3 Thanks
    sunnyjim1234
    At his age he might be better contributing not to a pension but to a LISA. That might help him buy a property at age (say) thirty. He can pay into a pension when he starts getting an employer's contribution.

    He can afford to defer paying into a pension because good old Dad has given him a flying start.
    Originally posted by kidmugsy
    Thats an excellent idea. Didn't think of that.
    That gives the Government uplift but without the inflexibility of the pension.
    Thank you very much.
    Regards
    James
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

379Posts Today

2,899Users online

Martin's Twitter
  • RT @TfLTravelAlerts: Oxford Circus and Bond Street stations now both reopened and all trains are stopping normally.

  • RT @metpoliceuk: We have not located any trace of suspects, evidence of shots fired or casualties. Officers still on scene. If you are in a?

  • My hopes and prayers are that this turns out to be nothing. Stay safe.

  • Follow Martin