Pension for new baby

ajdthomson

Hi,

We are expecting a new baby and I read an article in the paper recently about pensions for children which I had never considered before but on the face of it makes sense because of the top-up and inability to access at 18! A few questions I would be grateful for some help with from the forum:

- I think it said basic tax relief... (I am a higher rate tax payer if that matters), how does that all work... if I put in £100 is the pension plan credited with £120?
- Are there any limits etc?
- Any tips on best providers for child pension?

thanks in advance!

Your_Hero

ajdthomson wrote: »

Hi,

We are expecting a new baby and I read an article in the paper recently about pensions for children which I had never considered before but on the face of it makes sense because of the top-up and inability to access at 18!

More like age 57 for your child. So it depends what you want your child to use it for.

A few questions I would be grateful for some help with from the forum:

- I think it said basic tax relief... (I am a higher rate tax payer if that matters)

Makes no difference if you are HRT, because the relief is on the child.

how does that all work... if I put in £100 is the pension plan credited with £120?
- Are there any limits etc?
- Any tips on best providers for child pension?

thanks in advance!

Pay in £80 get £100 in the pot.

Maximum gross is £3,600. This is £2,880 net.

Decide if a pension is really right for your child first, bearing in mind that he/she won't have any access until age 57 (55 currently but rises to 57 when your child gets there) at the earliest.

I would have thought a junior ISA would be ok. If you don't want access by 18, then an ISA in your name?

kidmugsy

You could always ask those fond relatives who would normally give the child some premium bonds, and then in due course a christening mug, whether they'd like to fund the pension instead.

However, I admit that in their shoes I might decline the invitation. Although if you use the magic phrase "avoid inheritance tax", who knows?

ajdthomson

Your_Hero wrote: »

Decide if a pension is really right for your child first, bearing in mind that he/she won't have any access until age 57 (55 currently but rises to 57 when your child gets there) at the earliest.

I would have thought a junior ISA would be ok. If you don't want access by 18, then an ISA in your name?

Ahh - gotcha re. the relief... thanks. And yes, I see this as a true gift for their much older future self and will take care of the shorter term needs in Junior ISAs etc.

Thanks for the response, very clear.

ajdthomson

kidmugsy wrote: »

You could always ask those fond relatives who would normally give the child some premium bonds, and then in due course a christening mug, whether they'd like to fund the pension instead.

However, I admit that in their shoes I might decline the invitation. Although if you use the magic phrase "avoid inheritance tax", who knows?

This was all part of the plan

xylophone

Many years ago I was one of the Trustees for a minor- a pension was started (which he took over as an adult) but in conjunction with savings/investments held in bare trust.

https://www.gov.uk/junior-individual-savings-accounts/overview

re JISA.

And note the "£!00 rule" where income arises on parental gifts outside tax privileged schemes like JISA.

http://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/families/babsi.htm

http://www.hmrc.gov.uk/trusts/types/minors.htm

System

If instead you put the contributions into your own pension they would attract higher rate relief. Then in due course your child could inherit your pension, apparently, under the new rules.
He might have to wait a long time, perhaps, if you live to 98 !

kidmugsy

Clifford_Pope wrote: »

If instead you put the contributions into your own pension they would attract higher rate relief. Then in due course your child could inherit your pension, apparently, under the new rules.
He might have to wait a long time, perhaps, if you live to 98 !

The child of someone aged 98 would be about ready to retire. It's rather a good fit.