A pair of pensions

gadgetmind

I'm look at starting pensions for wife+daughter and would appreciate some advice.

For my wife, we'll just be paying in for 7-10 years until (hopefully!) retirement, and we'll be banging in £2880pa. We'd obviously like growth (I have 5% in my model) but as this isn't running for many decades, need to be reasonably cautious.

Daughter is 17, and we'll just be putting in £20pcm to get her started.

I was looking at an Aviva stakeholders via Cavendish, and this seems easy. However, others have mentioned Skandia CRA via Club Finance. This is tempting for my wife's pension as we have other investments (my SIPP and her ISAs) in Skandia and our IFA (who we won't be using again, long story) does annual balancing of this. We can easily clone the fund spread, or just do our own thing.

All feedback welcome. I'd like to kick off my wife's this tax year to use her allowance, but daughter's can wait.

Thanks

dunstonh

daughter has little choice to use a stakeholder due to size of premium. Your wife has access to personal pensions but if starting from a nil balance, then personal pensions, coupled with short time scale may not be cost effective.

kidmugsy

I put £20 into a pension for my daughter years ago. When she got older she asked me to explain pensions. Accordingly when she started work she joined her employer's Defined Contribution scheme, graciously accepting their matching contribution. Many of her colleagues didn't join. I conclude that it was £20 well spent.

gadgetmind

There are loads of people where I work who haven't joined our pension scheme, and clearly don't want the 7% contribution the company would pay into it for them. Mad!

I reckon that by kicking this pension off, even at such a low contribution rate, it will be easy for her to continue as there won't be all the research and paperwork to do. Of course, I will have to explain pensions to her, and the ISA and fund accounts she's going to be opening at 18. This won't be hard through as she's a bright enough bunny to be tackling five maths/science A-levels.

My wife's stakeholder is a harder one to justify. We'll be putting over £20k in over seven years, hopefully get a lump sum of £8k, but then we'll be able to draw about £750pa out of what's left (or £1100 ish if we want level rather than +3%pa) - it's a winner, but we wouldn't be doing it unless my pension and ISAs weren't maxed.