Pension for a baby

robp

Interesting thread!

We're due for our first arrival later this year, and I'm already looking into CTF's etc.

My wife thinks I'm a bit silly but I love the idea of giving my child a relatively prosperous start to their life.

dunstonh

There was a stat some years back that went something along the lines that if you paid £25 net pm from birth to age 18 and then stopped, it would be enough to provide around £10,000 a year income in retirement in real terms.

Dithering_Dad

There is a stakeholder calculator on the L&G website that calculates how much your child would have in their pension pot if you invest their Child Benefit each month (until age 16). For my 5 year old, if we invested nothing more than just her CB, she would have a pension pot of £62,300 and a monthly income of £174.

http://www.legalandgeneral.com/calculators/familyCalc.jsp

Not a fortune I know, but I'm sure that once she gets a job she will be able to continue investing into what could be already a very decent pension pot, or move the amount into her occupation pension if one is avaiilable.

What is really great is that you get the child benefit for free (whether you need it or not) and the government also adds 22% basic rate tax on top, even though your kids don't pay tax!!

Murphy_The_Cat

Dithering_Dad wrote: »

Hi Murph,

Just out of interest, which L&G funds did you go with in the end? How are you getting on with them?

Hello Mr D
I plumped for equal amounts going into
L&G Ethical
L&G Euro Index
L&G UK Recovery &
L&G UK Smaller Companies

This link will show you how the L&G funds are performing at the moment.
Not exactly earth shatteringly well :rotfl::rotfl::rotfl::rotfl:
But theres a long way togo and I've promised myself that I'll only do a remix once per year.

dunstonh wrote:

There was a stat some years back that went something along the lines that if you paid £25 net pm from birth to age 18 and then stopped, it would be enough to provide around £10,000 a year income in retirement in real terms.

Disregarding the actual figures for a moment - isn't Compound Interest just marvellous :j

robp wrote:

Interesting thread!

We're due for our first arrival later this year, and I'm already looking into CTF's etc.

My wife thinks I'm a bit silly but I love the idea of giving my child a relatively prosperous start to their life.

I've avoided adding an extra 1p to the CTF as the idea of an 18 year old having SOLE CONTROL over a large pot of tax free cash is (IMO) an accident waiting to happen.
As for the idea being silly or not - I get quite a kick out of investing for my children, especially as I'm never going to tell them about it until I see fit.

Dithering_Dad

Hi Murph. Thanks for the link, it's a real godsend - L&G are a bit poor on their website in telling you how their funds are doing.

Did you go through Cavendish Online to get the reduced AMC?

L&G's usual Annual Management Charges are 0.9% for 25k, 0.8 for 25 - 50k and 0.7k over 50k. If you go via Cavendish, you get back the Financial Adviser commission, which is 0.4%, so the rates are then 0.5% for the first 25k, 0.4 for 25k to 50k and 0.3 over 50k. I think there is also an additional charge while the fund is below 15k, so this might not be that useful at first, but over the course of 60 years it may add up to quite a bit!

Murphy_The_Cat

Dithering_Dad wrote: »

Hi Murph. Thanks for the link, it's a real godsend - L&G are a bit poor on their website in telling you how their funds are doing.

Did you go through Cavendish Online to get the reduced AMC?

No, I went via L&G directly. TBH, what they are charging is IMO relatively little anyway. What I intend to do os build up a bit of value in her pension (& my sons as well) and once they get up to about £5000, transfer them to H-L and convert it into a SIPP. :beer:

catshark88

Dithering_Dad wrote: »

There is a stakeholder calculator on the L&G website that calculates how much your child would have in their pension pot if you invest their Child Benefit each month (until age 16). For my 5 year old, if we invested nothing more than just her CB, she would have a pension pot of £62,300 and a monthly income of £174.

http://www.legalandgeneral.com/calculators/familyCalc.jsp

Thanks for the link. I have been saving DS CB in a savings pot with his name on it in our offset mortage. I will have a good think about the pension route though after seeing this. As now 1, pension could be £78k. Had no idea figure would be at that level.

Murphy_The_Cat

catshark88 wrote: »

Thanks for the link. I have been saving DS CB in a savings pot with his name on it in our offset mortage. I will have a good think about the pension route though after seeing this. As now 1, pension could be £78k. Had no idea figure would be at that level.

for an even more flexible (& eye opening) compound interest calulator, try here.