SIPP for my children

rcoe74

I am wanting to start pensions for my 2 children (2 & 5). I don't want to invest a huge amount (looking at £50/month each), I just believe that psychologically if they already have a pension when they are 20 they won't be like their parents and keep putting off and putting off starting one and will be well ahead of the game.

I was planning to use a lo-cost SIPP, such as iWeb. However, I'm confused about charges. If its £5 a trade, then aren't I losing 10% every month of my small contributions? Or do I pass the £50 into the account as cash and only purchase the funds/shares less frequently (which slightly defeats the object of monthly contributions?)

Thanks in advance for any advice.

LittleMissGiggles123

I have no idea on this subject but am following with interest as I would like to do something similar for my children.


Thanks

DesG

There are platforms that have reduced pricing for regular trading days, around £1.50 a pop.

Or there are platforms that charge an annual management fee (around 0.35% or more) and don't charge for fund purchases.

You'll also need to check you meet minimum funding requirements etc.

ozzage

For small monthly amounts you are better off with a platform with a % platform fee and no trading costs.

Hargreaves Lansdown is a "mainstream" choice. It's certainly not the cheapest but for small amounts it doesn't really make too much difference (although may do one day as the pot grows).

I would not normally recommend them due to the cost but for this purpose actually I would: they are easy to deal with and everything will almost certainly go smoothly. Whether you are paying 0.35% or 0.45% for the first few years will make almost no difference.

We do use HL for a SIPP for our daughter and pay the minimum (£40) per month. This gets grossed up to £50 courtesy of HMRC. There are no trading costs with HL so this is cost effective. There are no other charges.

atush

Personally, while I think it is a GREAT idea to open a pension for your kids, I'd open a S&S Jisa or intestment trust savings plan first instead.


Because (and I did this for my kids) you can build a fund for them to help them thru university, instead of graduating with 50-60K in debt rising at over 6% a year with student loans.

xylophone

I was once a Trustee for a minor- a pension (simple stakeholder) was started for him but not before other investments/other cash deposits were in place.

After graduation he chose to transfer the stakeholder to a SIPP run alongside his occupational pension.

rcoe74

atush wrote: »

Personally, while I think it is a GREAT idea to open a pension for your kids, I'd open a S&S Jisa or intestment trust savings plan first instead.

Thanks atush I agree and already have those running, but the point for me is as I say is to have the pension there and started, and also a pot of money that if at 21 they develop a healthy cocaine habit they can't touch!

kidmugsy

Why not use a regular savings account, and then once a year take out the money and pay it into a pension? That might keep charges down. First Direct and M&S both offer 6% p.a. Regular Savers at the moment, connected to their current accounts. Though there would be tax to pay, presumably. Or are there regular savers accounts that can be opened in the children's names, and therefore presumably tax-free? Anyone?

atush

rcoe74 wrote: »

Thanks atush I agree and already have those running, but the point for me is as I say is to have the pension there and started, and also a pot of money that if at 21 they develop a healthy cocaine habit they can't touch!

Maybe then mention such a thing in your OP if you dont want such correction lol/

but like you, I didn't know when/if my twins in nappies would be university material or not (all studies say summer babies aren't esp twins) but guess what. they were.

So, I opened investment trust savings plans (thru the provider, they were all those years/decades ago very cheap- as cheap as the cheapest platforms now)and guess what- if you hold them in your name via a designated acct, you can control the money until you decide yourself they are capable. To me this is university graduation and employment. Or in twin 2's case, law school.

For you it could just be confidence in their ability to use the money wisely and not squander it?

xylophone

http://www.legalandgeneral.com/pensions-retirement/stakeholder-pensions/stakeholder-pension-for-children/

http://www.aviva.co.uk/stakeholder-pension/stakeholder-pensions-for-children.html

http://scottishwidows.co.uk/guides/pensions/index.html

http://www.friendslife.co.uk/doclib/xpen95d.pdf

http://www.hl.co.uk/pensions/vantage-junior-sipp

https://www.fidelity.co.uk/investor/pensions/open-junior-sipp.page

Etc .....plenty of choice!

puk999

xylophone wrote: »

http://www.friendslife.co.uk/doclib/xpen95d.pdf

From that document:

We set up the plan to provide benefits from their selected retirement age. This can be any age between 50 and 65.

They can start taking between the age of 50 and 75...

I thought 55 was the earliest age for current retirees and that's expected to raise with SRA, so why would they be saying age 50?