SIPPs for children - difference of opinions with OH

DT2001

Our children had SIPPs started by Grandparent. Each had £3600 gross put in and that has piqued their interest in pensions with annual valuations. So they understand more about compounding and pensions generally.

We have not added to their pensions but are adding to ours (both well below LTA) on the basis (hopefully correct) that we can pass on the money to them (even if I make it to 100 our eldest will be under SPA)

anonmoose

Keep_pedalling said:

anonmoose said:

I have opened SIPPs for both of my kids recently.  Both mid teens.  I put in £1k that had been sitting in PBs gifted by a grandparent at birth.  I will also contribute probably 1-2k a year for a few years and my main aim is to get them to start thinking about long term as well as short term savings.  I don't want to go mad as I am conscious about the lifetime allowance for them and more pressing priorities like our own pensions and paying for our uni contributions x 2!  

I read an article showing the cumulative effect of putting in the max allowance for the first few years of life and it blew me away! I am seeing it as giving some of their inheritance early.  My son is already interested in how his investments are doing
  
My eldest has recently started a well paid part time job and I am trying to get her to put in 5% but I can understand she has bigger priorities at the moment.  She is 17 and laughs when I talk of pensions. Just even getting her to think about it is a start.

They also have a small amount in an ISA which originally was earmarked for our uni contribution but I am letting them have it towards house deposit instead.  I just have to trust at 18 they play ball and not spend the money once they have control over it!  They have both agreed it will be saved for a house.  

So I would say go for it.  Although I am the sort of person who would do it anyway even if my husband didn't see the benefits.  But we have the sort of relationship that he wouldn't mind if he knows it's important to me.  Maybe if you phrase it that way and say it is important to you to do this for the kids he might be ok with it.

And in answer to keep-pedallings questions about why SIPP rather than savings needed sooner, I think part of it for me is that I might no longer be here when they will have access to the SIPP and I would love to think it would help them be comfortable in old age.  Hopefully they will be good with money and well paid and my contribution will turn out to be unnecessary, but if they are not so good with money or poorly paid it could help them significantly.

Surely you had no right to put money gifted to your children by the grandparent into a SIPP. The money was not yours to to make that decision. 

Wow someone is uptight! 

I spoke to the kids about it and they agreed it was a sensible thing to do based on the fact their win rate was shocking and they understood the situation about compounding.  I told them I was going to open a SIPP for them anyway and would they like that money to be transferred and they both said yes.  So they made that decision not me.  I really didn't think I needed to make that clear in my post but possibly your comment is not about my post at all and more about you.

Marcon

anonmoose said:

Keep_pedalling said:

anonmoose said:

I have opened SIPPs for both of my kids recently.  Both mid teens.  I put in £1k that had been sitting in PBs gifted by a grandparent at birth.  I will also contribute probably 1-2k a year for a few years and my main aim is to get them to start thinking about long term as well as short term savings.  I don't want to go mad as I am conscious about the lifetime allowance for them and more pressing priorities like our own pensions and paying for our uni contributions x 2!  

I read an article showing the cumulative effect of putting in the max allowance for the first few years of life and it blew me away! I am seeing it as giving some of their inheritance early.  My son is already interested in how his investments are doing
  
My eldest has recently started a well paid part time job and I am trying to get her to put in 5% but I can understand she has bigger priorities at the moment.  She is 17 and laughs when I talk of pensions. Just even getting her to think about it is a start.

They also have a small amount in an ISA which originally was earmarked for our uni contribution but I am letting them have it towards house deposit instead.  I just have to trust at 18 they play ball and not spend the money once they have control over it!  They have both agreed it will be saved for a house.  

So I would say go for it.  Although I am the sort of person who would do it anyway even if my husband didn't see the benefits.  But we have the sort of relationship that he wouldn't mind if he knows it's important to me.  Maybe if you phrase it that way and say it is important to you to do this for the kids he might be ok with it.

And in answer to keep-pedallings questions about why SIPP rather than savings needed sooner, I think part of it for me is that I might no longer be here when they will have access to the SIPP and I would love to think it would help them be comfortable in old age.  Hopefully they will be good with money and well paid and my contribution will turn out to be unnecessary, but if they are not so good with money or poorly paid it could help them significantly.

Surely you had no right to put money gifted to your children by the grandparent into a SIPP. The money was not yours to to make that decision. 

Wow someone is uptight! 

I spoke to the kids about it and they agreed it was a sensible thing to do based on the fact their win rate was shocking and they understood the situation about compounding.  I told them I was going to open a SIPP for them anyway and would they like that money to be transferred and they both said yes.  So they made that decision not me.  I really didn't think I needed to make that clear in my post but possibly your comment is not about my post at all and more about you.

You post at your peril on this board, as you've just discovered!

Sounds as if you are doing a lot right in a situation where there quite simply isn't 'best' (or even necessarily 'right') approach. £50 a month isn't a 'small' contribution - many people would love to be able to save that amount for their offspring.

daveshep26

In principle there's a very strong argument for starting pension for children - it's financially very advantageous for them (in the very long-term),

However there's always lots of things you could put your surplus towards - so i think's it's about what priorities are and my reading was OP's OH wasn't being negative on this at all - I'd take the following as constructive input, 
"Main argument - too long to lock the money for them; we better help them earlier."

OP - I think you're doing them a massive benefit thinking this all through and what you're already doing is fantastic - but things work best when everyone's aligned 100% (IMO)

steampowered

Personally, I would much prefer a Junior ISA - invested in stocks & shares. 

Pensions are simply stocks & shares investments. Any stocks & shares investment will compound.

If your children end up being high earners, they are likely hit the lifetime allowance (currently £1 million - could be reduced in future) which makes additional pension contributions punitive. 

£1 million sounds like a lot - but in reality it's not, its quite easy to hit that allowance if you are a decent earner making pension contributions.  

Junior ISAs are better because they automatically turn into adult ISAs when the kids turn 18. The money could be left in there where it will continue to generate good returns tax free, or it could be turned into cash whenever required. 

Keep_pedalling

anonmoose said:

Keep_pedalling said:

anonmoose said:

I have opened SIPPs for both of my kids recently.  Both mid teens.  I put in £1k that had been sitting in PBs gifted by a grandparent at birth.  I will also contribute probably 1-2k a year for a few years and my main aim is to get them to start thinking about long term as well as short term savings.  I don't want to go mad as I am conscious about the lifetime allowance for them and more pressing priorities like our own pensions and paying for our uni contributions x 2!  

I read an article showing the cumulative effect of putting in the max allowance for the first few years of life and it blew me away! I am seeing it as giving some of their inheritance early.  My son is already interested in how his investments are doing
  
My eldest has recently started a well paid part time job and I am trying to get her to put in 5% but I can understand she has bigger priorities at the moment.  She is 17 and laughs when I talk of pensions. Just even getting her to think about it is a start.

They also have a small amount in an ISA which originally was earmarked for our uni contribution but I am letting them have it towards house deposit instead.  I just have to trust at 18 they play ball and not spend the money once they have control over it!  They have both agreed it will be saved for a house.  

So I would say go for it.  Although I am the sort of person who would do it anyway even if my husband didn't see the benefits.  But we have the sort of relationship that he wouldn't mind if he knows it's important to me.  Maybe if you phrase it that way and say it is important to you to do this for the kids he might be ok with it.

And in answer to keep-pedallings questions about why SIPP rather than savings needed sooner, I think part of it for me is that I might no longer be here when they will have access to the SIPP and I would love to think it would help them be comfortable in old age.  Hopefully they will be good with money and well paid and my contribution will turn out to be unnecessary, but if they are not so good with money or poorly paid it could help them significantly.

Surely you had no right to put money gifted to your children by the grandparent into a SIPP. The money was not yours to to make that decision. 

Wow someone is uptight! 

I spoke to the kids about it and they agreed it was a sensible thing to do based on the fact their win rate was shocking and they understood the situation about compounding.  I told them I was going to open a SIPP for them anyway and would they like that money to be transferred and they both said yes.  So they made that decision not me.  I really didn't think I needed to make that clear in my post but possibly your comment is not about my post at all and more about you.

Your original post suggested you made the decision unilaterally, even so your children are minors  so are more likely to go along with a suggestion from adults that they may latter regret. We make gifts to our GCs JISAs and I would be somewhat angry if any of their parents persuaded them put those investments into a pension, that is not what we gifted the money for. 

anonmoose

Keep_pedalling said:

anonmoose said:

Keep_pedalling said:

anonmoose said:

I have opened SIPPs for both of my kids recently.  Both mid teens.  I put in £1k that had been sitting in PBs gifted by a grandparent at birth.  I will also contribute probably 1-2k a year for a few years and my main aim is to get them to start thinking about long term as well as short term savings.  I don't want to go mad as I am conscious about the lifetime allowance for them and more pressing priorities like our own pensions and paying for our uni contributions x 2!  

I read an article showing the cumulative effect of putting in the max allowance for the first few years of life and it blew me away! I am seeing it as giving some of their inheritance early.  My son is already interested in how his investments are doing
  
My eldest has recently started a well paid part time job and I am trying to get her to put in 5% but I can understand she has bigger priorities at the moment.  She is 17 and laughs when I talk of pensions. Just even getting her to think about it is a start.

They also have a small amount in an ISA which originally was earmarked for our uni contribution but I am letting them have it towards house deposit instead.  I just have to trust at 18 they play ball and not spend the money once they have control over it!  They have both agreed it will be saved for a house.  

So I would say go for it.  Although I am the sort of person who would do it anyway even if my husband didn't see the benefits.  But we have the sort of relationship that he wouldn't mind if he knows it's important to me.  Maybe if you phrase it that way and say it is important to you to do this for the kids he might be ok with it.

And in answer to keep-pedallings questions about why SIPP rather than savings needed sooner, I think part of it for me is that I might no longer be here when they will have access to the SIPP and I would love to think it would help them be comfortable in old age.  Hopefully they will be good with money and well paid and my contribution will turn out to be unnecessary, but if they are not so good with money or poorly paid it could help them significantly.

Surely you had no right to put money gifted to your children by the grandparent into a SIPP. The money was not yours to to make that decision. 

Wow someone is uptight! 

I spoke to the kids about it and they agreed it was a sensible thing to do based on the fact their win rate was shocking and they understood the situation about compounding.  I told them I was going to open a SIPP for them anyway and would they like that money to be transferred and they both said yes.  So they made that decision not me.  I really didn't think I needed to make that clear in my post but possibly your comment is not about my post at all and more about you.

Your original post suggested you made the decision unilaterally, even so your children are minors  so are more likely to go along with a suggestion from adults that they may latter regret. We make gifts to our GCs JISAs and I would be somewhat angry if any of their parents persuaded them put those investments into a pension, that is not what we gifted the money for. 

I assumed it would be obvious that I didn't do the transfer without consulting them as over 16s have access to their own accounts so it would be impossible for me to do.  The whole point is to get them to start thinking of long term savings so it would be ridiculous to do without their permission and input.  To suggest I coerced them is frankly hilarious as you don't know my kids.  We all try to guide our kids to make wise decisions but ultimately it is up to them.

I pay monthly into JISAs for my kids and they will have a house deposit, uni contributions and a little pension pot so for you to suggest I am doing something wrong is ridiculous!  The only criteria the grandparent had was the money to be long term saved not spent on rubbish.  So it fits the bill and frankly is between me and the grandparent and our kids to agree on which we did before they recently died.

I think you are pushing your situation with your GCs onto me and it's not relevant to our circumstances. You made some rather rash comments without even bothering to ask the questions or understand our circumstances.

*And apologies to the OP for this diversion.  You are doing a great job with what you are already doing whether or not you decide to go for the SIPPs in a couple of years.

WYSPECIAL

We make gifts to our GCs JISAs and I would be somewhat angry if any of their parents persuaded them put those investments into a pension, that is not what we gifted the money for. 

If you’ve gifted it then you no longer have control over it. You could be as angry as you like but the decision would be with whoever has control of the gift, parent or child.

Alexland

Around 18 months ago I opened Fidelity junior SIPPs for our little kids with £20+5 per month while it was still possible to secure them a protected access age of 55. Any account opened now would be age 57 access. I stopped contributing after 5 months. I recently chucked another £100+25 each into the accounts as the market has been a bit weak recently so they have around £250 each.
I doubt we will add more for a while but might do as part of estate planning to give them an age 55-57 pension pot.
We have made more significant contributions into their Fidelity JISAs and our various adult ISAs (earmarked to help them) so the junior SIPPs are just a novelty. I don't really want to waste their lifetime allowance when they might be able to sal sac or avoid higher rate tax by making contributions from employment in future.

NedS

Is the lifetime allowance a concern? If parents/grandparents plough significant amounts of money into a childs SIPP, may that not go on to impact upon what they may be able to pay into their pension in later life due to the lifetime allowance should they be good earners? A few hundred gifted from grandparents probably isn't an issue, but if regular contributions were going in from birth, starting so young, with so many years to compound?