pension for children?

wayne1234

Hi sorry if this has been asked before but with every one allways telling me you should invest in a pension ect...........The problem for me is that to get anything out of a pension i would have to start investing about £500 a month,its not going to happen,be serious.Im not saying they are a bad thing but having been self employed for a lot of my working life and only employed for the last 10 years and the small amount i do put in is going to reap a pittance,so saying all this why can i not start a pension for my two children who are 4 and 6 so that when they eventually start working they will allready have a nice stash.Or am i wrong and they can start one now.

Teazel

Hi
Yes you can start a pension for your children. There are only two companies that do it I think, Scottish widows and standard life if I remember correctly. We do a stakeholder scheme with Scottish widows and put in the child benefit money. Hope this helps.

dunstonh

Virtually all providers will do pensions for under 18s.

The problem for me is that to get anything out of a pension i would have to start investing about £500 a month

Not unless you are using very low risk or low potential investments and/or you have left it too late.

Im not saying they are a bad thing but having been self employed for a lot of my working life and only employed for the last 10 years and the small amount i do put in is going to reap a pittance

As will be your state pension as your period of self employment means you didnt add qualifying years for the second state pension in that period.

so saying all this why can i not start a pension for my two children who are 4 and 6 so that when they eventually start working they will allready have a nice stash.

Thats very nice of you but with you not getting full state pensions yourself and your post suggesting your own retirement provision is weak, why not focus on yourself?

wayne1234

Hi i understand what your saying about myself but as i said the amount i have been told to put in to my pension to live the way we are now was around £470 a month.I started a pension when i was 22 for £30 a month im now 41 and this will be worth about £11 a month when i retire so i thought i could start my kids off now so they have a fighting chance.

bendix

wayne1234 wrote: »

Hi i understand what your saying about myself but as i said the amount i have been told to put in to my pension to live the way we are now was around £470 a month.I started a pension when i was 22 for £30 a month im now 41 and this will be worth about £11 a month when i retire so i thought i could start my kids off now so they have a fighting chance.

No disrespect mate, but I am assuming that you earn much more now than you did when you were 22, and that £30 a month then is worth considerably less in real terms than 19 years ago.

Surely, it dawned on you that it might be worth increasing that £30 contribution every year as your income grew?

You only get out of pensions what you put into them - they don't magically grow unless they are fed.

dunstonh

I started a pension when i was 22 for £30 a month im now 41

£30 was a low to medium contribution 22 years ago. Now its a pointless waste of money. Why didnt you increase it over the years to keep its real terms value?

Average earnings per month in 1988 was £224 (male). Its now £451. You paid £30 in 1988. You pay £30 now.

You MUST keep the pension contributions up in real terms. The problem is nothing to do with pensions but a complete lack of realism. You effectively created your own black hole and now you are faced with the realisation that you now have to play catch up for not paying enough in as well as paying a more realistic figure.

I'm sorry that sounds harsh but hopefully there will be others reading this who are still young enough to realise that they need to increase their contributions with at least inflation or their earnings. So, they can benefit from your story. It is a very common story and one that is easily avoidable.

However, you are still only 41 years old. Your state pension age is 66. So, you have 25 years to go. That is still enough time to pay in a reasonable amount and it will make a difference. A pension plan is still the best way to provide an income in retirement. Nothing else (conventional) beats it. Not ISAs, not cash savings, not unit trusts. It has limitations on capital provision but for income its top of the pile.

There is no need for you to call defeat at age 41 and decide that you want to live on £7000 a year for around 20 years of your life (chances are it will be less as your lower living standards will make life more difficult). You still have time to bring that up. Even if it isnt by as much as you would like.

jamesd

wayne1234 wrote: »

I have been told to put in to my pension to live the way we are now was around £470 a month. im now 41.

You're giving up way too early. A check with the Hargreaves Lansdown pension estimator shows that for every £100 a month you pay in you might reasonably expect to get £172 a month/£2,063 a year in pension income starting from age 66, increasing with inflation each year. This assumes no lump sum is taken. It completely ignores the value of your current pension plan.

You'll probably be on at least £6,000 from the state pensions and can get a state pension forecast to check that. So, what after tax income do you want to have? If it's say £10,000 then you could reasonably expect to achieve that using £200 a month in contributions because about the first £10,000 of income per person is tax free after state pension age.

If you're married then your partner, even if not working, can put in up to £3,600 a year including basic rate tax relief so to get the next chunk above £10,000 it's best to start making some contributions for their pension so you can get as much income free of tax as possible.

If you think that £10,000 is too low then take a look at the expenses you won't have any more when retired. If you still think you need more, well, add £50 a month for every thousand a year more you think you'll need.