Starting a pension fund for a child

MM2005

Hi

I am looking to start a pension fund for my son (who is 13). Obviously it's always best to start as soon as possible with a pension but I am also hoping to teach the value of money to him! At the moment he gets pocket money from grandparents and more or less what he wants from us. Perhaps a bit late in the day but I am thinking of asking the grandparents to put this money directly into a pensions account of some kind. He has some savings which he alwasy says he'll use if we ask him to save up for something. We are thinking of getting him to work for his money because at the moment it holds no value to him.

I'd appreciate your thoughts on the above and also any decent pension funds suited to this situation.

Many Thanks
Mo

EdInvestor

You can contribute a max of 3,600 a year (incl tax relief) into a pension for him.If you want to use the pension as a way of teaching him investing and money management, you may like to put it in a low cost online SIPP where he can invest it himself in a wide range of assets (including cash and shares ), having done his research of course, and watch it grow - or not, depending on what he learns.

https://www.sippdeal.co.uk offers kids' pension accounts of this kind.

dunstonh

How the heck can you recommend a SIPP without knowing the contribution levels?

A SIPP could be the most expensive option available.

MM2005

This would be more adhoc payments - perhaps a pension fund is not the right choice, but certainly I want something which will not be available to him until he is mature enough to not waste it away! Perhaps trust funds are more appropriate?

erb

MM2005 wrote:

Hi

I am looking to start a pension fund for my son (who is 13). Obviously it's always best to start as soon as possible with a pension but I am also hoping to teach the value of money to him! At the moment he gets pocket money from grandparents and more or less what he wants from us. Perhaps a bit late in the day but I am thinking of asking the grandparents to put this money directly into a pensions account of some kind. He has some savings which he alwasy says he'll use if we ask him to save up for something. We are thinking of getting him to work for his money because at the moment it holds no value to him.

I'd appreciate your thoughts on the above and also any decent pension funds suited to this situation.

Many Thanks
Mo

I have a similar situation with 15 year old daughter and 13 year old son. I took out a steakholder pension for both of them a few years ago with Standard Life but they do not have much interest in this as pensions are a long way off for them.

To teach them the value of money I agreed a budget with them for a lot of the things I bought them such as clothes, CDs, magazines, make-up (daughter only). They had no idea how much things cost initially. After agreeing the monthly budget I said I would give them this amount each month and they had to manage it and buy these items themselves. They opened childrens savings accounts to put the money in and anything they saved rather than spent was theirs to keep. They now both look for best value items and are building up reasonable savings in their accounts. This has worked for my 2 as they both now appreciate how much things cost and if they can find a better deal they keep the money they have saved.

EdInvestor

they do not have much interest in this as pensions are a long way off for them.

This is the problem - I suspect it may be much the same with the CTF.If you arrange it so that they cannot access the money for many years, there is little interest in it.

The trick is, as erb says, to start them off with savings accounts and incentivise them to shop around and save, on the bais they keep any money they don't spend.Lots of building socs have accounts for kids with good rates.

Milarky

I've mentioned this before, but I think the F&C have produced a very good PDF booklet entitled: "Your guide to saving for children" which explained very well, I felt, the options for those with children who do [and who do not] have access to a Child Trust Fund. I think the OP only really wishes to consider a pension as one of a range of choices and I suspect that he could do a lot worse than looking at more general ways of saving for his child first.

HTH

[Here's the link to the page where I found this - it wasn't easy! http://www.fandc.com/literature_text.asp?pageId=2.3.6 ]

MM2005

All

Many thanks for the replies. My father set up a child savings account with the Halifax a few years back and it was building up nicely but lately we've got a bit lax on pushing him to put the money in he receives as presents etc.

I think the budget thing is a good idea combined with his savings account. I definitely recognise the post above about kids not knowing how much things cost!

I think I'll also try and invest something myself for him also. Do you think it's a wise move to be starting a pension for a child of 13 anyway? Or would I be better trying something else as a long term plan?

Thanks again
Mo