Pensions for kids

magic_pants

Hi,

General question really regarding taking out a pension for a child of only 1 year old. I was wondering what the pension experts on this board thought of taking out a pension on behalf of a child was? I was considering starting a pension for my son in the thinking that by the time he his, say, 18 he will have nice little pot to start with. I think (and correct me if I am wrong) that the max you can do is £3600 per annum but is a pension for a 1 year old really the best thing to do with £3600 per annum or are other investment vehicles better?

Any thoughts? (apoloogies of this has been covered before!)

Best regards.

ReportInvestor

The main plus for doing this IMHO is that you are setting up an investment, that can't be touched until 55 (and maybe later).

That's 54 years of compounded stock market growth.

How many readers of this forum posses a 54 year stock market investment?
How many wish they did?

magic_pants

Hi,

Indeed. I just wish my parents had invested in a pension for me before I could walk and talk! But then they wouldn't have known the current pension problems would arise. I think it would be a good idea to be honest and at least would allow him to contribute less in later years should he so desire.

Many thanks for your input.

dunstonh

its a nice idea in theory and the child would certainly benefit but a unit trust would be a better option over the long term. You just have to look at the investment products from 10 years ago, 20 years ago and 30 years ago and see how poor they were compared with today. A pension would be putting the money away and locking it up for 68-70 years with no ability to move it into alternatives if something better comes along. Which there will be.


brilliant that you are looking to do it but the product is possibly the wrong choice.

ReportInvestor

Of course it may not look so attractive at age 18 :rotfl: .

But then again, that could be another reason to do it.

An alternative, modern USA puritan approach is to give 'em a good education but give your dosh away to charity.

magic_pants

OK, I think I will take some more advice on the subject. I feel that I have the chance to start off some sort of investment for him and it certainly can't hurt. Unit trusts are interesting but I'm not too Au Fait with that area so I'll go and get some one to one advice.

Many many thanks for your thoughts.

dunstonh

Unit trusts are interesting but I'm not too Au Fait with that area so I'll go and get some one to one advice.

Nowadays most of the UK tax wrappers can invest in exactly the same areas. So, the funds that are available on unit trusts are also present for ISAs, Investment bonds and pensions. So the fund research would be no different if it was unit trust or pension.