Junior Pensions (SIPP) Tell me everything!

WayForward?

Hi I am considering a junior pension for our child. I am trying to research the best way to go about it and also the pros & cons.

So far I have:
- government tax relief of 20%
- way to save for your childs future (very long term though)

I am not sure on impacts of Inheritance tax?

Where is the best place to start investing?

I'd love to hear thoughts / experiences and ideas please.

thank you :j

Marcon

If you look at the SIPP provider websites, they have all the information you'll need. Google on 'Junior SIPP providers' and you'll get loads of helpful links instantly.

No impact on IHT when you die - the pension belongs to the child.

greenglide

So minor things like education, housing etc are already fully provided for?


Pensions start when you start working IMHO. Children should have JISAs etc first and pensions should be a last choice (nowhere else to put the money).

Brynsam

greenglide wrote: »

So minor things like education, housing etc are already fully provided for?


Pensions start when you start working IMHO. Children should have JISAs etc first and pensions should be a last choice (nowhere else to put the money).

Most of me agrees with that sentiment, but pensions always come bottom of the list. Starting one at birth, with very modest sums, can make a massive difference in that far off hinterland of 'retirement'.

Dox

A stakeholder might be a better idea, depending on the amount of cash you are planning to invest - charges are usually lower. Can always be transferred to a SIPP at a later date.

AnotherJoe

Brynsam wrote: »

Most of me agrees with that sentiment, but pensions always come bottom of the list. Starting one at birth, with very modest sums, can make a massive difference in that far off hinterland of 'retirement'.

But the same amount invested for education or a house would also make a massive difference and be more useful much quicker. And statistically its much more likely to be both used and needed.


Hence the thought that its best used when everything else is maxxed out.

kidmugsy

There's a high chance that the incentives for your pension contributions (20% tax relief plus nil employer's contribution) are currently the lowest your child will ever be subject to. Moreover if your child becomes a high earner for a substantial period there's a chance that these ill-incentivised contributions will eat up some of his Lifetime Allowance.

As a way of using up your exemptions from inheritance tax it seems pretty lame to me. See the comments above for better ideas.

tacpot12

Moreover if your child becomes a high earner for a substantial period there's a chance that these ill-incentivised contributions will eat up some of his Lifetime Allowance.

So what? I'd rather have no lifetime allowance left than some remaining.

There's a high chance that the incentives for your pension contributions (20% tax relief plus nil employer's contribution) are currently the lowest your child will ever be subject to.

I disagree. The employerr's contribution isn't an incentive anyway, its part of your reward package and you only get such a package when you are working. I think it possible that the government will reduce the tax incentives on pensions, e.g. removing some or all of the additional relief available to higer rate tax payers.

So I think pensions are a good investment for a child; 1) becuase the investment has so long to grow and 2) becuase the child can't get their hands on the cash until they are old enough to understand its value.

Dox

AnotherJoe wrote: »

But the same amount invested for education or a house would also make a massive difference and be more useful much quicker. And statistically its much more likely to be both used and needed.


Hence the thought that its best used when everything else is maxxed out.

Maybe everything else is maxed out.

I'm fascinated that there are stats on this - please could you give a link to where they are?

dunstonh

Junior Pensions (SIPP) Tell me everything!

There is no such thing is the first thing to tell you. Virtually all pensions, whether stakeholder pension, personal pension or SIPP allow minors. Anyone referring to their product as a Junior SIPP is just doing it in a marketing sense.

Personally, I prefer a stakeholder pension for children/grandchildren. Less scope to go wrong when they take over the pension at 18. Giving them a SIPP at 18 is like handing an 18 year old the keys to an F1 car.

kidmugsy

tacpot12 wrote: »

So what? I'd rather have no lifetime allowance left than some remaining.

You'd rather have your LTA used up by contributions the had only a dismal 20% incentive rather than, say, salary sacrificed contributions that might be accompanied by an employer's contribution, two sets of NI savings, and 40% tax avoided? You must be mad.

tacpot12 wrote: »

The employerr's contribution isn't an incentive anyway.

You clearly don't grasp the meaning of "incentive".