Setting up pension for 17yo nephew

KMA

hi there, am currently considering setting up some sort of saving scheme/pension for my 17 year old nephew, this would be funded from a small inheritance that is due within the next year.


I don't want the money to be immediately accessible to my nephew as he will probably would want to spend it and want some time for the investment to mature, and potentially be added to over time when I can, which is why I was thinking of a pension, at least he might be able to have a better funded old age even if he has to wait at least 40 years to get his hands on it!.


I don't have any children of my own. I had the foresight to save early on and have set up my own stakeholder pension over the years and seen how that relatively small sum has grown from investment growth and tax benefits.


My other concern is: can I set it up for him? If so how could I do that? I'm a bit concerned if I have to go through his mother (my sister) as she too has the profligate gene and does not understand delayed gratification of a pension!


Welcome your inputs on this and/or also if you think there are other longer term savings/investments that I can consider setting up for him....


thanks in advance!

dunstonh

hi there, am currently considering setting up some sort of saving scheme/pension for my 17 year old nephew, this would be funded from a small inheritance that is due within the next year.

There is a risk on that transaction. If he is getting an inheritance but not old enough to have control himself then paying the money into a pension could actually be a transaction that leaves the trustees open to unsuitable use of the money.

if the Will states that it was to go into a pension in his name then that is fine. However, if it doesn't then it could cause trouble and put you at risk of legal action.

Your objectives may be well intentioned but it may be better to have these discussions with the nephew directly and not have the executor or trustee pay into the pension but let the nephew receive the money directly and then he pays the money into his pension.

KMA

thank you for the rapid response Dunstonh, looking at your answer I realised I've worded my question poorly.


What I meant was that I am due to receive some inheritance money myself (my money).


I was thinking about using some of that unexpected money to consider 'treating' my nephew to a pension or long term investment paid to help him out for his later life.


My nephew is not a beneficiary of the inheritance, it would be a totally independent transaction. I was just thinking what I might like to do with some of it, so I was just explaining the source of my unexpected windfall. Sorry for the confusion caused by my poor phrasing!

dunstonh

What I meant was that I am due to receive some inheritance money myself (my money).

No problems then. You are free to gift your own money as you like.

KMA

Guess my next question is:


Can I set up a stakeholder pension or suchlike for him?


If so how could I do that? I'm a bit concerned if I have to go through his mother (my sister) as she too has the profligate gene and does not understand delayed gratification of a pension!

xylophone

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

might be worth a look.