Suitable Pension for a child

TrickyTrotter_2

I am very fortunate to be in a final salary pension scheme. I see little prospect of my 10 year old ever getting a decent pension from a future employer, so I would like to start one for him now.

I aim to pay £50 a month say for 8 years until he is 18, after that he will be on his own. I would like to invest it in UK Equity Income funds, but don't want the costs to be excessive.

What are my options? Is a stakeholder pension a better option than a SIPP? Are there other options?

Grateful for the collective wisdom of other posters on here.

dunstonh

What are my options?

Stakeholder, personal pension or SIPP.

Is a stakeholder pension a better option than a SIPP?

For some people yes, for others no. For some people a personal pension is best. Based on your very limited criteria, I would say the SIPP is not appropriate. A stakeholder is probably best although a personal pension is could be better suited.

MikeJones_2

Hi TrickyTrotter,

Whilst not exactly answering your question you might be interested in the articles linked from here - food for thought perhaps:

- Children, pensions and inheritance tax


As for 'very fortunate to be in a final salary pension scheme', sadly you might also be interested/horrified in this:

- Final salary pensions 'to close'


Kind regards,

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

EdInvestor

TrickyTrotter wrote: »

I aim to pay £50 a month say for 8 years until he is 18, after that he will be on his own. I would like to invest it in UK Equity Income funds, but don't want the costs to be excessive.

[/quote]

I'd suggest a low cost online SIPP.You won't usually find UK equity income funds in stakeholders, and PPs will often only have a choice of one or two.

https://www.h-l.co.uk has the cheapest such SIPP for regular fund contributions.

https://www.citywire.co.uk/Funds/Home.aspx

is a good spot to compare EI funds. Note that some of the best ones (eg Invesco Perpetual Income) are migrating to the "Income and Growth" category so as to give themselves more flexibility.

TrickyTrotter_2

Thanks for the replies.

I'll have a look at the options and costs of your respective suggestions. I'm invested in Equity Income funds through ISAs and my Invesco Perpetual funds have weathered the storm reasonably well so far, so think it is a good option with some growth prospects.

I know its tied up for a long time and he may not thank me for having to wait to access it, but there won't be any final salary schemes left by the time he is 60 (or whatever "normal" retirement age is 50 years) and who knows at what age and rate any State pension will be.

dunstonh

left by the time he is 60 (or whatever "normal" retirement age is 50 years)

Age 68 from 2044. It may go towards 70 after that but currently 68 is the figure it is known it is going to increase to.

Lokolo

dunstonh wrote: »

Age 68 from 2044. It may go towards 70 after that but currently 68 is the figure it is known it is going to increase to.

Are you kidding me!?!?!?!

dunstonh

Lokolo wrote: »

Are you kidding me!?!?!?!

I'm afraid not. The rises are as follows:

1 - between 2010 and 2020 womens state retirement age will increase to 65.
2 - pension credit will cease to be available at 60 and be increased to match state retirement age (including future increases in that age)
3 - between 2024 and 2046 the state retirement age will increase from 65 to 68.

Thats the bit that is already known about and going to happen.

What is likely to happen is that in 10-15 years time, they will announce that it is likely to continue the phasing of the state age to 70. However, that is just opinion right now.

Lokolo

I know you know I'm young and naive. But does that mean any pension I have I won't have access to until that age?

jamesd

It applies to the state pensions. Personal and work pensions have their own rules. Do note that the monimum age for taking a personal pension is soon to increase from 50 to 55, so those aren't immune to legislative risk either.

Lokolo

Are state pensions the things that NI contributes to that everyone gets?