Pension for daughte

basketmaker

Our daughter (25)has a long term condition which means she is too unwell to work and may never be well enough. She receives benefits and lives with and is cared for by us at present.

I believe we can pay into a pension for her so she could have at least a small pension. Is there a suitable pension around for someone in this situation. It would need to be flexible so we can reduce payments if necessary if our finances change.
Thanks

Linton

As a non-earner she can pay a maximum of £2880/year into a pension. HMRC increase this with tax relief (for tax she may not have paid) to make a total of £3[STRIKE]5[/STRIKE]600.

Whether a pension is the best vehicle for you to use to provide long term support I dont know. Hopefully someone else can comment on this.

TBagpuss

I think the benefit of paying into a pension, as opposed to making other types of monetary gift, if that it won't be counted as capital as it would if the money were held by daughter in any other form.

Obviously when she reaches retirement age and starts to draw the pension it would (probably! - who knows what the rules will be in 30+ years!) be taken into account as income at that point.

You may want to build up a small pot of savings first, so that you have some capital you could lend or give her for emergencies, before you start to invest into a pension. If you gave her them money and she pays it into a pension then I believe she would have to declare the money as income, for any means- tested benefits she gets, so you would need to make the payments directly to to the pension.

In my experiences, most pensions are flexible in terms of how much / for how long you pay in,so you can usually stop or reduce payments if you need to.

It's worth taking advice before choosing a provider, to make sure that any charges are low, and to ensure that you have the flexibility you need.

IanSt

A pension would mean that she would not be able to access the money for another 30+ years - currently the age is 55 but there is talk of extending it to 57 and it is likely to extend as normal state retirement age increases, so does that fit in with how you think she'll need those payments?

If you think that she may need access earlier then it may be that cash and S&S ISAs could be a better home for at least some of the money. Though you would need to check that any money from that would not affect her benefits.

I know next to nothing about the benefit system, but do the benefits she is receiving mean that she is getting credit for her national insurance as that is likely to be the biggest source of income in her later life.

Before making any final decisions it may be worth your while to put a post into the benefits forum to double check that she won't be accidentally disadvantaged by them.

Ps there was a slight typo in Linton's post as the £2880 gets bumped up by the govt by £720 to £3600.

basketmaker

Thanks for your replies. We already have some savings which can be used if she needs anything at the moment.

Where is the best place to get advice about choosing a provider?

xylophone

If you want a basic option to which £2880 per annum can be contributed perhaps a simple stakeholder would do?

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

dunstonh

Where is the best place to get advice about choosing a provider?

An IFA. However, unless you have a family iFA, it is unlikely that an IFA will offer services for such a small amount. And to be honest, a simple stakeholder as mentioned above would likely be the advice.