We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Pension for my sons

Options
Hi Money savers
I'd like to start a pension for both of my twin sons. I want to pay approx £20/£25 into each pension until I retire in about 5 or 6 years. Once I retire I would like to give the pensions to my sons for them to continue paying the payment/contributions until they retire.
Can anyone recommend a pension company or indeed a product that may be suitable.?
Steve
«1

Comments

  • dunstonh
    dunstonh Posts: 119,676 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    Generally, that contribution level and being for a child means most would use a stakeholder pension.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • cloud_dog
    cloud_dog Posts: 6,322 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Hi Money savers
    I'd like to start a pension for both of my twin sons.
    How old are your sons?
    Personal Responsibility - Sad but True :D

    Sometimes.... I am like a dog with a bone
  • Alexland
    Alexland Posts: 10,183 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    edited 23 September 2017 at 1:27PM
    We just opened an Aviva stakeholder via Cavendish for my wife (to stuff in parallel to her company scheme matched against her total annual income before she leaves work and then for after when she is a non earner) and it seems to be a high quality product with a sound investment strategy and low fees.

    Your sons might be better contributing to their workplace scheme once they start work to get employer matched contributions and other potential benefits. Even additional contributions can be better in an employer scheme if salary sacrifice is available.

    I guess they will have the choice of transfering this pension into their employer scheme or leave it to run in parallel incase it is useful for them in future as a weapon in their tax planning tool bag.

    I wouldn't get sentimental about whatever you choose as they may have better options to meet their needs in future. Even if they transfer away from the scheme the money is invested and that's what matters.

    Alex
  • pip895
    pip895 Posts: 1,178 Forumite
    Tenth Anniversary 1,000 Posts Combo Breaker
    What is the advantage of a stakeholder pension over a SIPP. I have started a SIPP for my daughter and stuck the money in VSL100 the platform costs are 0.25% of the invested amount.
  • OldBeanz
    OldBeanz Posts: 1,436 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    "that contribution level"
  • Alexland
    Alexland Posts: 10,183 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    edited 23 September 2017 at 1:24PM
    Stakeholders are simpler (less choice but still high quality funds) and have a single fee that covers the wrapper and fund. On the Aviva stakeholder it automatically sells units to pay fees so you can be all invested without holding a cash balance as many DIY platforms require which should give a tiny returns improvement and is less risk of penalty charges to worry about.

    The fees are comparable to VLS in a percentage based SIPP (unless you have an IFA adding their management cost which is why it's worth paying Cavendish £35 execution only setup fee) depending on the value and monthly contributions can be as low as £20. Ok there's usually no setup fee on a SIPP but often a bigger transfer out or closure fee.

    Also I understand insured funds in a stakeholder are protected above the normal 50k FSCS limit however above roughly 80k a fixed price SIPP is usually cheaper.

    So an investor would choose a SIPP and someone who just wants to fire and forget may choose a stakeholder. If they become a more interested investor in future they can usually transfer out without an exit charge. The only problem with this logic is that as stakeholders become less common you need to have an interest in investment to even know about them and understand why they might be suitable! Marketing department budgets are spent on SIPPs.

    Late next year when Vanguard launch a SIPP it could turn off the tap on the new stakeholder applications (and take a proportion of the existing SIPP market) as if the platform fee is 0.15 and they are happy to deduct charges automatically (as they are with ISAs) then it would be very compelling as a fire and forget option. Also there is unlikely to be a setup, transfer out or closure fee with Vanguard. They have already confirmed the fee will be so low that they will not be able to cover your old SIPP provider exit costs. It will be interesting to see where they cap their SIPP costs as the ISA cap of £375 is high compared to Interactive Investor or Halifax SD.

    Still in our case we have specific reason to get lots of money in this tax year so it's not worth waiting for Vanguard who haven't even released their pricing yet. We already have a lot of money in Vanguard and Blackrock so it's good to have some with Aviva to spread the risk of fraud within the fund manager.

    Alex
  • ceewash
    ceewash Posts: 1,368 Forumite
    Part of the Furniture 1,000 Posts
    How old are your sons?
  • Alexland
    Alexland Posts: 10,183 Forumite
    10,000 Posts Seventh Anniversary Photogenic Name Dropper
    edited 23 September 2017 at 11:13AM
    @louloubelle79 why did you use L&G stakeholders? When I found their charges burried in a PDF from their website it starts at 1pc where the highest charge at Aviva via Cavendish for small pots is 0.55pc? Are you getting it at a discount from somewhere?
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.6K Spending & Discounts
  • 244K Work, Benefits & Business
  • 598.9K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.3K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.