Stakeholders Pension for Childrens

MalaRybka

Dear Forum users,

I am writing to you to enquire about a pension for children.

I have recently read in the newspaper that I could start saving towards my son's pension (he is 4 years old at the moment) by contributing monthly into a stakeholder pension for children.

If that's correct, please could somebody tell me if there is a search engine available on the market that would allow me to see who offers the most competitive pension scheme?
Further, what is the minimum & maximum monthly (or annually) contribution into the pot, what are the admin charges and where is the money invested in?

Many thanks in advance.

MR

BargainMad_3

You are correct that children can indeed have a stakeholder pension but they just take out the "same" stakeholder pensions that are available to adults i.e. there are no specific stakeholder pensions designed for children; only stakeholder pensions that can be taken out by anybody.

Therefore the rules and regulations pertaining to stakeholder pensions - and the performance tables for them - are equally applicable for a child or an adult.

Of course the present age restrictions means any money invested would not be able to be accessed for a good 50 years, but that might be exactly what you are looking for.

However I would say * hang fire * and wait until the Junior ISAs are launched this November (2011) and see exactly what is on offer there. Of course you might have enough funds to do both, but if you only have a fixed amount per month then the Junior ISAs might be better as they allow money to be taken out at 18 - very handy given the way University Fees/House deposits are going!

And when your son gets employment it is likely that an occupational pension will (still) exist at a future employer and these are always superior to a stakeholder and the new "NEST" pension will have been well established by then also.

So my advice is to look at Junior ISAs as a means of saving a lump sum that can be accessed IN FULL at 18, rather than saving in a stakeholder that "only" buys an annuity at 55...or 60....or 70 or whatever the minimum age will be by then.


HOWEVER !!!!!

There is a current concern that children with Child Trust Funds (and all children from April 2002-Feb 2011 have these by choice or compulsion) might be ***locked out*** of Junior ISAs. We will have to see what is decided later this year.

Lokolo

The maximum is £2,880 a year as he is a non tax payer. This will get upped to £3,600 after tax relief is added.

Charges depend on the pension provider you go with.

Where the money is invested is up to you.

However I do agree with the above ^^ plan him starting his life, he can sort out his own pension.

dunstonh

Not just stakeholder but personal pension and SIPPs too. Stakeholder is just a defined charging method.

please could somebody tell me if there is a search engine available on the market that would allow me to see who offers the most competitive pension scheme?

No there isnt.

Further, what is the minimum & maximum monthly (or annually) contribution into the pot

£20pm typically is the minimum and £3600 p.a. is the maximum for a non earner.

what are the admin charges and where is the money invested in?

admin charges depend on the type of pension you buy and the terms you agree and the investments you use. The investments can be selected from the whole of market allowing a virtual unlimited variation nowadays (although typically from around 1000-2000 funds is common).

Loughton_Monkey

I would endorse this as a valuable and valid thing to do for kids.

Pensions are 100% transferrable (as between companies etc.) and so you would not be making any huge mistake plumping for a low charging 'stakeholder' - although as has been said, the word is a bit outdated now, since there are other pensions with low charges.

But the key thing to understand is that having chosen your company, and contribution rate/method, it is the funds that will provide the growth. Not the 'pension' itself. So you need to take a hard interest into what fund(s) to choose.

This is, however, an extremely wide subject and very much subject to opinion. Given that the money will (by definition) be there a very long time, then you need to be thinking more about the so-called 'adventurous' funds rather than the 'safe' ones.