Kids Pensions - tax efficient

[Deleted User]

consequences said:

One can lead a horse to water but one cannot make it drink.

I couldn't agree more.

consequences said:

Which is also why I dont wish to pay into a JISA and hope they wont blow it at 18.
With the best will in the world, we bring up our children a certain way, but, there are many outside influences so we never know what they may turn into, or what kind of career they may have.

A different take on it.
You're in a position to help them and it appears that they have a head start over many of their peers.
I'm in a similar situation, I very much involve my kids with my thought processes, decisions taken and our financial journey.
They've a good idea of what they have, what it might turn into and the opportunities it offers them.
They're also aware that once it's gone, it's gone and it can be very difficult to replace.
Basically, I'm teaching them to be little money saving experts.
Ultimately, unless something goes seriously offtrack, they will be inheriting the empire, they'd just as well start learning to be stewards from an early age. Touch wood, it seems to be working out ok so far...

LV_426

consequences said:

One can lead a horse to water but one cannot make it drink.
Which is also why I dont wish to pay into a JISA and hope they wont blow it at 18.
With the best will in the world, we bring up our children a certain way, but, there are many outside influences so we never know what they may turn into, or what kind of career they may have.
For the youndsters today, debt is inevitable.

True, and appears to be accepted. I think back to my university days, there were no student loans. I got a full grant and graduated with a positive bank balance and no debts. I then managed to buy a house at probably the best time in a generation.
Anything I can do to pay those financial breaks forward, I will.

consequences

Marcon said:

A mortgage, yes - but otherwise not inevitable at all. If parents take debt for granted in respect of their children, and pass on that message/mindset to their offspring, then you are substantially increasing the likelihood of just such an outcome.

I dont wish to a philosophical arguement about it, however it is quite clear that the vast majority of the population are saddled with debt and year on year that number continues on an upwards trend.

Children of the future will have to deal with increasing HPI, loans for degrees, loans for vehicles, higher energy bills and green levies, and ever more likely private health care.
With few serious concequences if defaulting ie: most is often written off.

Debt is inevitable. Which you agreed with.
We can only teach our children that it's important to manage the level of debt appropraite to their means.
Unfortunately not everyone believes in that, so no matter what I may teach my children, many of their peers are going to go around using debt as a wildly out of control tool, which has the effect of creating things like HPI, cost of vehicles, etc etc.

As we have seen most recently playing out with people taking on far too great of a mortgage for example on a tracker rather than fixing, not expecting interest rate rises and then looking to blame other people for their own poor financial choices.than own responsibility.
Which was a familiar story back in 2008

And every crash throughout recent history.

So. Inveitable.

consequences

[Deleted User] said:

I'm in a similar situation, I very much involve my kids with my thought processes, decisions taken and our financial journey.

They're also aware that once it's gone, it's gone and it can be very difficult to replace.

The other day I took my 9yr old shopping and he was responsible for bringing the plastic bags from the car.
We got to the checkout and he had forgotten them. I told him he was going to have to pay for replacing them which he accepted.
Out came his wallet.
We ended up needing a third bag, to which he said he wasn't paying for it since I only told him to bring two anyway and thus it wasn't fair.

With a huge level of pride I told him that was well negotiated and of course he'd only have to pay for two.
When we got home and he finished helping to empty the shopping, he asked for his bags back.
I told him not to forget to put an entry in his ledger.
I think we should be ok.

LV_426

consequences said:

[Deleted User] said:

I'm in a similar situation, I very much involve my kids with my thought processes, decisions taken and our financial journey.

They're also aware that once it's gone, it's gone and it can be very difficult to replace.

The other day I took my 9yr old shopping and he was responsible for bringing the plastic bags from the car.
We got to the checkout and he had forgotten them. I told him he was going to have to pay for replacing them which he accepted.
Out came his wallet.
We ended up needing a third bag, to which he said he wasn't paying for it since I only told him to bring two anyway and thus it wasn't fair.

With a huge level of pride I told him that was well negotiated and of course he'd only have to pay for two.
When we got home and he finished helping to empty the shopping, he asked for his bags back.
I told him not to forget to put an entry in his ledger.
I think we should be ok.

Chip off the old block? 

consequences

It's the best day when your kids out think you.

Pablo7474

You haven’t said how old you are or how old your child is, but you could set up a LISA in your name, pay in £4,000 per year and get £1,000 bonus per year until 50. Then leave invested until you turn 60 and at that point withdraw and give to child.

Would work well as long you as long as you live 7 years beyond 60. Free of income tax on withdrawal and child can’t access themselves.  

I should add you can’t open LISA at 40 or older. 

ader42

I plan on putting the £2880 each year into a JSIPP for my son until he starts work.

When he starts work I will insist that he puts money into a SIPP and whatever he puts in his SIPP I will gift him the cash equivalent from my pension pot. The main intent is to maximise compounded growth for him down the line whilst avoiding the lifetime allowance tax barrier at age 75.

With respect to debt I hope he learns his lesson about that early like I did with a simple small bank loan when I first started work. 

artyboy

I've filled up my kids JISAs but pensions are a step too far for me - it will be at least 40 years before they will have any access to it, and heaven knows what amount of rule changes and tax tinkering will take place over that time. 

Plus, and this is worst-case thinking, if they were really destitute and in need at some point, I'd hate to think that there was money locked away with no hope of addressing a more immediate problem.

Of course there will always be the risk that children will not spend money the way you think best, once they gain control of it. But I think the best you can do is educate, steer and lead by example (or at least hide the bad examples  ). Mine both seem to have a decent work ethic and don't spend TOO frivolously, so fingers crossed...