Small Older Pension Fund

JT6689

Hi,

My wife and I are expecting our first child in a few months and want to set up some form of savings for his future. I have pretty much no idea about how to properly make the best choices for saving for future except to take an interest in it from a very early stage

I have a small amount of money (approx £3500) in an old pension pot from a previous employer and was wondering what would be the best way to utilise this money over the next 20 years or so? Would it be best to

A)transfer to a SIPP in my name, manage it and withdraw it at as a lump sum to give to my son and what are the implications in terms of tax, money allowed to be granted to someone etc?

can I transfer the money out into something like a stocks and shares isa or something that tracks a fund such as I can choose to invest my pension but in my sons name and I actively manage that over the years?

My wife and I still plan to contribute money regularly to whatever option we choose but having a choice of investments which we can actively managed I feel could give us a better return on the money rather than a standard savings account.

Any advice welcome. Thanks

AlanP_2

JT6689 wrote: »

Hi,

My wife and I are expecting our first child in a few months and want to set up some form of savings for his future. I have pretty much no idea about how to properly make the best choices for saving for future except to take an interest in it from a very early stage

I have a small amount of money (approx £3500) in an old pension pot from a previous employer and was wondering what would be the best way to utilise this money over the next 20 years or so? Would it be best to

A)transfer to a SIPP in my name, manage it and withdraw it at as a lump sum to give to my son and what are the implications in terms of tax, money allowed to be granted to someone etc?

can I transfer the money out into something like a stocks and shares isa or something that tracks a fund such as I can choose to invest my pension but in my sons name and I actively manage that over the years?

My wife and I still plan to contribute money regularly to whatever option we choose but having a choice of investments which we can actively managed I feel could give us a better return on the money rather than a standard savings account.

Any advice welcome. Thanks

You need to be 55+ to access a pension fund, and as and when you do anything over the 25% tax free lump sum is counted as income and subject to tax at your top rate.

So that rules out Option B and makes Option A a long-term option (depending on your age) and possible not very efficient once tax is paid on it.

As for how you could build a pot for your child have a look at a S&S Junior ISA possibly.

xylophone

Are you dissatisfied with the management of the pension?

Is there any reason why it should not be left where it is and used to fund your retirement?

There are other options for saving for your child.

Had you considered a JISA?

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

http://monevator.com/how-to-invest-for-children/

Other posters have commented favourably on the Charles Stanley offering.

https://www.charles-stanley-direct.co.uk/Our_Services/JISA/

The JISA belongs to the child absolutely and he has the right to access it at the age of 18.

If the idea of the child having access at 18 worries you, then you can regard your own ISA as being "earmarked" for your child at a time of your choosing.

However, this money remains yours, and in the unfortunate event that you ever required means tested benefits, would be taken into account.

When you come to give such money to your adult child, there could be IHT implications, depending on the rules at that time.

atush

Your pensions are for your future, not to give to a child now (or even later if you need it).

So leave it or transfer it to your Sipp.

In the meantiine open a Jisa 9if you want them to have access at age 18) or an investment trust savings scheme and save the CB each month to grow a pot for them later.