SIPP for child(ren)

mr_rush

Have already set up a JISA for my son - 19m old - aim is to max out contributions for as long as possible and hopefully he will use the ££ for higher education / property purchase etc in due course.

Am considering a small trickle of money into a SIPP for him as well. Just because of the tax benefits and the very long scale investment period.

Just wondering if others have done this for their children and any drawbacks - assuming it is affordable.

Realistically we'd only put in £100/m into it at the moment.

dunstonh

Just wondering if others have done this for their children and any drawbacks - assuming it is affordable.

Loads of people. Although stakeholder pensions are generally more commonly used than SIPPs.

mr_rush

what are the advantages / disadvantages of stakeholder v SIPP?

dunstonh

mr_rush wrote: »

what are the advantages / disadvantages of stakeholder v SIPP?

SIPPs are more work. That is mainly it. Making sure the cash account has a float to pay the fees (or pick a SIPP provider with an auto-sale). At 18, you will pass that product with more work onto your child who will not have the knowledge or experience to handle that in most likelihood.

By going with stakeholder, you can get a simple option that requires no work from you and no work from the child when they take it over. If they later want to move it into something else, they can do so at no cost.

Apart from that, there is little difference.

Swanmeader

I am looking to set up pensions for our 2 children aged 25 and 27 as I have good pensions and want to pass on that benefit to them. I am considering the Lisa for April 17 but wonder whether we should just buy some sort of pension instead. The stakeholder option above sounds interesting.
Any advice appreciated.

zagfles

I can't really see much point in pensions for young children - the money will be tied up for so long, they'd likely be better off getting help/more help towards a house, then when they're working they'll be able to afford to put more into a pension as they'll have less mortgage to pay, and they might get more tax relief doing it that way.

But it's all speculation as to how the pensions legislation will change over the next 60 years...it's changed enough in the last 6!

dunstonh

I am looking to set up pensions for our 2 children aged 25 and 27 as I have good pensions and want to pass on that benefit to them.

In which case, you would be a third party payer into their existing pensions (or a new one). Many individual providers/pensions will allow third party payers. Although not all workplace schemes will.

As they are adults, they would be in control of it.