Stakeholder for Children

gil13

Just thought I would ask what others have decided to do in terms of setting up a stakeholder pension for children. I have been looking around on the web and it is clear that you need to look at the underlying funds for performance, this goes for house funds and external funds. has anyone narrowed it down and how did they purchase, direct, through a discount broker perhaps. Would be interested to hear comments, I like the idea of the tax rebate and over the long term if started early pensions may well be a useful vehicle for our children. If they can have less of a worry over pensions than some people have now that's got to be a good thing I guess.

chesky369

They're going to need a mortgage before they need a pension - it would be better to save to assist them with that.

Milarky

This is ironic. Children cannot open an ISA until 16 (cash) or 18 (investment). Children born after 1st September 2002 only can have tax free savings in a CTF - which in this respect is like an ISA, but for children born between 1986 and 2002 there is basically a wait until they turn 16 to have access to tax free savings in their own name - Yet since 2002 they can 'save' (whose money?) upto £3600 per annum from birth into a personal/stakeholder pension.

(Joined up government an example of is this not!)

EdInvestor

The friendly societies offer "tax exempt" 10 year savings bonds up to 25 pounds a month for children outide the CTF. But these usually have high charges and are invested in With profits funds, which are dying out and performing poorly.

You can get the tax savings anyway these days on equity investment if you hold unit trusts direct - ISAs dont have any advantage for small sums.

macca64

chesky369 wrote:

They're going to need a mortgage before they need a pension - it would be better to save to assist them with that.

That's all true, but the stockmarket has historically been the best place to invest, so best option surely would be to invest in UT's/OEIC's on behalf of them, then use that to fund a deposit for a house?

gil13

Agree, that stock market is the place for long term investment if history continues. Yes, it is important to do other saving for our children if we are lucky enough to be able to afford it, however little. I was just wondering if others have decided upon a good stakeholder pension which over the timescales from say birth to 65, could be a very large sum due to compounding and PCA effect. The tax break is very useful over this period if you are lucky enough to pick a good fund, although yes they will be taxed on it when they draw it. The downside is that Governments (expecially Labour Governments) like to tinker with pensions, so in 60 odd years time who's to know what legisilation our children will have, tax free lumps sums, etc etc. That is a downside, but as a part of saving for them they have their place in my view together with CTF, UT's and the rest. We are looking at all this at the moment, F&C seem quite good for CTF's.

Moonbeam

I've recently started a pension for my 3 year old son at £10 per month with the Halifax. Not always the best decision for investments, but basically decided to go with them because I work there and trust the advice the PFA gave me..... I've limited it at £10 per month so that I can invest more heavily in other things which will hopefully give me the money to give him a deposit for a house when he needs it, but that is invested in my name so that I can decide when it's right for him to have some....

The main reason I selected a pension is the additional funds put in by the government, but I agree with everyone else, things can and will change in this area. However, no-one can predict the future so I will just keep an eye on what future governments do and react as and when I can to the current situation.....

In addition, I at age of 31 have only just started my first pension, so I thought it wise to get one started for my son as soon as possible, I know I wish I'd started mine a lot earlier