childrens pension

henry24

Me and the wife give money to a goddaughter that goes into a saving plan run by her parents that earns very little so we wondered why can't we put money into a pension so in 60 years it should be a decent amount for her retirement there must be a reason but what is it

dunstonh

You can do that.

henry24

How is it the same as starting any pension? We was told we couldn't

p00hsticks

henry24 wrote: »

We was told we couldn't

by whom were you told ?

dunstonh

henry24 wrote: »

How is it the same as starting any pension? We was told we couldn't

Perhaps the person you asked didnt know what they are talking about.
Perhaps the provider that does you pension does not facilitate it (doesnt mean others wont).

I have arranged a fair number of pensions for minors. Typically it is from grandparents but have had a god parent do it before.

henry24

Thank you for your advice dunstonh. It wasn't a provider who told us so that's why we have got things wrong.
Could you name a couple of companies we could look to help us decide what to do.

zagfles

Here's a few:

https://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/

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

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

dunstonh

Most providers will do it but some may have minimum premiums which may rule them out on that basis. Stakeholder pensions are the most popular option for this sort of thing as they have very low minimum premiums.

The parent will need to know as they sign as legal guardian and on behalf of the child and they receive the documentation until the child is old enough. However, the pension is in the child's name. The parent cannot touch it. You would be a third party payer.

Number75

I know you only asked if you could not if you should... but as I set one up for my daughter I thought I'd way in with my opinion. Feel free to discount it!

Setting it up was as easy as a phone call - done.

But I actually stopped after 2 years of allowance (2x £2880 grossed up to £3600). I was very drawn to the tax relief. But...

I decided that my money would be of use funding:
- advanced level study / training
- business start up
- house purchase
- paying for childcare (of my grandchildren) so my child can keep her career progressing

All of which would come MUCH earlier in life, and potentially be an investment with a far greater payout (just hard to quantify for an 8 year old!)

A pension for her would be fantastic... but, when she is 60 I'll be 94 if I'm still going - and her father most likely dead! There are no guarantees in life, but we're divorced so there are 2 lots of assets floating around, and as it stands in our now 40s/50s, our only child will inherit a reasonable sum.

So even though I love the idea of compound interest over all those years, I decided that she could potentially make more of my money earlier in her life - and may not even need it as a pensioner.

So - it's easy to set up, but I would recommend looking at the bigger picture for this child first. In my opinion, they're a great way to make a wealthy (in terms of family money) child wealthier, but if they have limited money coming to them from kind relatives, they may be far more grateful for a house deposit!

kidmugsy

Number75 wrote: »

So even though I love the idea of compound interest over all those years, I decided that she could potentially make more of my money earlier in her life - and may not even need it as a pensioner. ... they may be far more grateful for a house deposit!

Sounds wise to me.

henry24

Thanks to all of you for your advice.

Number75 you said I asked if we could not if we should so before going to your other points should we? We thought of pension because only being the godparents closer family could help with housing and education but a pension would get forgotten about, also we are both in our late 50s with no family of our own so could still help out if needed.
When she is 60 we would be 120 so long gone and a pension is something she could look at and say my godparents gave me this when I was only 6 months old.