Start a pension for my son

marylee

Please advise me, my 25yrs old does not want to know anything about saving for his pension. He is giving up his job from the government and withdrew his pension as he is just under 2 yrs of service.

I would like to help him by starting may be a stakeholder pension. I cannot afford a lot may be £50 - 100, and that will give him a head start. I also would like to know whether I could start the pension myself in his name and pay by direct debit from my own account. At the moment, he is thinking of using his pensions money to travel. Help, please. Thanks

Milarky

What a fool! But what is done is done, I'm afraid.

Yes, there is nothing to stop you [or anyone] making contributions on behalf of another person. The only thing I would check are whether his travelling abroard affects eligibility [it might, but I doubt it]

As regards his career, is he likely to return to government service [i.e. has he left that one definitely?] since being able to rejoin a public sector pension might be the better option for any 'additional' contributions which you might make now [i.e. he could benefit more from the same money being directed later through salary via higher personal contributions as an employee.]

Because the payments you might make would be in his name then [I think] any tax relief is based on his earnings not yours. In any event payments attract an automatic basic rate tax relief. For a non earning individual the annual contribution limits are £3600 [£2808 net of BR tax relief]. Also it is possible to 'carry back' one year [make contributions in a current tax year in respect of a previous tax year] but I believe the cut-off is 31st January each year ... so assuming you did have the cash to throw as this sprendthrift son of yours then you could...

Fund 2003-04 to £3600 [paying £2808] now before 31 Jan
Fund 2004-05 to £3600 [paying £2808] before 5th April
Fund 2005-06 to £3600 [paying £2808] after 6th April

Hope that's correct - others will comment if not  :)

Good luck [don't be hasty!]

Pal

I suggest saving for yourself first. You can always put the money in your own pension, then when you are retired, give the additional income you are receiving to your son for him to put in his pension.

Finishrich

Buy him a copy of The Automatic Millionaire by David Bach ISBN 0767914104 available from Amazon for £9.39.

It's not a get rich quick book, more about saving for the long term. After reading this I'm sure he'll be more interested in increasing his pension contributions than spending what he's already saved up.

There was a review of this on the Motley Fool website.