Pension for a child

FunnyPete

I'm looking at options for providing for my childs future. As I started my pension fund quite late on and am having to put 14% of my salary into it to hopefully provide a suitable retirement, it seems logical to me to give my child a kick start in this area.

I've looked at the junior ISA's but the risk here is that at 18 years they gain access to it all and decide to blow it on cars and women !!
I'd like to think that wont happen, but I haven't had a chance to get to know them yet.

I dislike the lack of parental control at 18 years and unfortunately the £100 rule has killed off other options, other than "grandparent contributions".
I would be happy that it was their money, so long as the parent had to grant control (or upon death is automaticaly given).


So pension seems logical since they will attract an extra 20% tax relief on the money that I place into it.
I'm looking to fund it at around £100/month for 18 years and possibly beyond that period.
I can't say how long exactly, but certainly till at least 18 years.

There may be lump sums from grandparents to go into this as well, and possibly additional monthly contributions but a discussion is needed there with others.


Reading back through this section of the forum, there is a camp that feels this is a good thing to do, and there is a camp that says it's financially stupid; due to the value of the money in 55yrs++ with inflation.

Bearing that in mind, it seems to me quite similar to that of starting at 18yrs till 55yrs++, you're still suffering from inflation over time, but starting later; although perhaps putting in more every month.


So I see my tax efficent options are pension or Junior ISA.
Is there any other savings option that I have not considered ?
Conditional trusts (ie: no accesss till 25-30 years?) ? - tax implications?

Thanks for reading!

xylophone

http://www.hmrc.gov.uk/trusts/types/index.htm
http://www2.skandia.co.uk/Adviser/KnowledgeDirect/Investments/Collectives/Designated-Accounts-explained/
http://www.moneymarketing.co.uk/investments/good-financial-planning-can-mimic-benefits-of-child-trust-funds/1020490.article

Children are likely to need help before age 55 (or later if the govt change the rules again).

I know a young person for whom a pension was started when he was a minor but savings that were easier to access were in place as well.

atush

I think the pension could be a good idea, but I would reduce it from 100 a month. Mainly because your child will be far more likely to need help with a university education (even if they borrow all the tuition they have to live on something) or buying their first home. Just investinving 25 a month could grow very nicely over t he next 18 years much less 55 or more.

If them getting it at 18 is a problem, you have a few options. Do you use 100% of your S&S isa allowance? If not, use some of it to invest for them but you have control.

You can also save outside a tax wrapper in a re:acct and still invest in equities. this would also remain your money beneficially, so add its (or the ISA's ) existence to your will and how and when you want the money to be used.