Paying into son's pension

Unitedwestand_2

I have 2 son's aged 31&24. They are both self-employed and as yet have made no provision for their retirement.
I would like them to get started as soon as. I can afford to make a small monthly payment for each of them ,I would like to pay it in directly so as I know it is going in there and avoid the temptation of them spending it on something else.
Can I do this? And where do I start looking for a pension scheme to open for them? I'm a bit naive about this as I'm in my works scheme so not had to research it all.
Any help would be grateful

Dox

Yes, you can do it. Bear in mind that you don't get any tax relief - the pension provider will claim basic rate relief based on the amount you contribute and this is added to the relevant pension 'pot'.

Stakeholder pensions are one simple, straightforward option - see https://www.moneyadviceservice.org.uk/en/articles/stakeholder-pensions

SIPPs are also a possibility - https://www.moneysavingexpert.com/savings/cheap-sipps/

tibbles209

You can indeed pay into someone else's pension, although they would need to open one first. A stakeholder pension may be the most straightforward option if you/your sons are not confident in selecting what the funds are invested in, as stakeholder pensions invest in default funds, so there is less room to make mistakes.

This is of course a kind gesture on your part, but ultimately your sons need to understand and take responsibility for their own retirement provision. They may benefit more from you helping them understand how much they need to be saving to achieve an adequate income in retirement, and the major effect delaying starting a pension will have on how much they need to contribute overall.

Marcon

tibbles209 wrote: »

They may benefit more from you helping them understand how much they need to be saving to achieve an adequate income in retirement, and the major effect delaying starting a pension will have on how much they need to contribute overall.

Doubt it! Cash is king, whether from a parent or from the sons themselves. Actually getting a pension set up with a spot of money in it is more likely to motivate them than any amount of parental lecturing, especially when, as OP points out, this is entirely new territory for him/her, too.

tibbles209

Marcon wrote: »

Doubt it! Cash is king, whether from a parent or from the sons themselves. Actually getting a pension set up with a spot of money in it is more likely to motivate them than any amount of parental lecturing, especially when, as OP points out, this is entirely new territory for him/her, too.

It may motivate them to start saving, but equally it could backfire and lead them to think their pension is taken care of since dad is contributing to one for them, so they don't need to think about it. There are a lot of people who are auto-enrolled with the default minimum contributions who consider themselves to be 'saving for retirement' without having any concept of how inadequate these savings are. A real understanding of the magnitude of savings required to provide for themselves would serve them better than a trickle of cash into a pension.

If it is indeed a 'small' amount that OP will be putting aside monthly, then this will not come close to providing adequate provision for retirement on its own, and it is essential that his sons learn to recognise how much they need to be saving to achieve an adequate income in retirement.

Perhaps offering pension contributions on the condition that the sons also contribute a set amount would act as a motive, and increase the overall amount being saved.

Mojisola

tibbles209 wrote: »

A stakeholder pension may be the most straightforward option if you/your sons are not confident in selecting what the funds are invested in, as stakeholder pensions invest in default funds, so there is less room to make mistakes.

My son found it very difficult to get a stakeholder pension set up.

He had to go for a SIPP in the end.

xylophone

My son found it very difficult to get a stakeholder pension set up.

Even through Cavendish?

https://www.cavendishonline.co.uk/stakeholder-pension

dmelife

I would suggest you offer to match their contribution up to whatever you are happy to contribute. That way they will be engaged and motivated to save.

Unitedwestand_2

Thanks for all the replies. My boy's are aware of their financial obligations it's just that they're saving hard to get on the housing ladder and the oldest has a family of his own. So money's tight.
Is it alright to pay direct from my bank account or does it have to come from theirs?

triplea35

My son has a SIPP with Hargreaves Lansdown. I have made a few significant payments into it direct from my current account. Not had any issue with it and HL have claimed the tax.
I encourage my son to pay into a LISA which he can use for either a house purchase or retirement without losing the tax advantage.

JoeCrystal

tibbles209 wrote: »

This is, of course, a kind gesture on your part, but ultimately your sons need to understand and take responsibility for their own retirement provision. They may benefit more from you helping them understand how much they need to be saving to achieve an adequate income in retirement, and the major effect delaying starting a pension will have on how much they need to contribute overall.

I am in full agreement with tibbles209 on this. The sons should be taking responsibility for their retirement provision. At very least highlight the issues with the sons, nevermind if the money is tight. It is all very well focusing on the housing ladder, but the pension should be something they should pay into as well. At very least, they should be getting the state pension so that should help a little (providing they pay NI contributions if applicable.