Child's (junior) Pension

homestraight

Hi All

Would forum members think it's a good idea to explore 'junior sipps' once junior isa and my own allowances are filled? 
Especially with recent LTA changes etc. 

I can see some pros but am sure there are more cons I haven't considered. Would appreciate some thoughts on that. 

Thanks
HS

MX5huggy

If you’ve filled ISA with £20k used up your AA £40k (and the same for any partner) put £9k in a JISA for them.

Then you have enough money around that £2880 (because I presume they have no earnings) into a SIPP for them seems like a  good plan but not an important decision. You are locking the money away till they are at least 57. 

Alexland

I did have a concern about wasting the child's LTA for 'only' getting a basic rate incentive when I dream they might go on to get higher rate relief on most of their pension contributions in future but I guess that doesn't matter now. Still if their pensions get really big there could be a risk they might pay higher rate tax on drawing the pension income especially now the tax free PCLS is going to be eroded by inflation. Still it would be a nice problem to have and the rules will have changed by then so who knows.

I did speculatively open free Fidelity SIPPs for my kids a few years ago (they already have free Fidelity JISAs) with a modest amount in order to secure them an account they could contribute more into that offers the protected age 55 access incase it is useful to them in future. Age 55 access is no longer available on new accounts but maybe it might be worth opening so that they might get a protected access age if/when the government next announce further increases in pension access age?

dunstonh

Would forum members think it's a good idea to explore 'junior sipps' once junior isa and my own allowances are filled? 

There is no such thing as a Junior SIPP.  Minors have access to the same pensions as adults.  What you see when you come across Junior SIPPs is marketing only.   

I can see some pros but am sure there are more cons I haven't considered. Would appreciate some thoughts on that. 

No real negatives other than your gift to them is inaccessible for 60 or so years.   They may have other needs you may consider funding (first house deposit, uni, private schooling etc)

cloud_dog

We focussed on the near term (our accounts for them, and using the JISA), but a little bit prior to age 18 we did open a pension.  This was simply for certainty purpose (to have knowledge one was available / open) and for us to pass on monies should we wish to. 

Albermarle

homestraight said:

Hi All

Would forum members think it's a good idea to explore 'junior sipps' once junior isa and my own allowances are filled? 
Especially with recent LTA changes etc. 

I can see some pros but am sure there are more cons I haven't considered. Would appreciate some thoughts on that. 

Thanks
HS

A lot can change with pensions over decades and a lot has changed in previous decades.
The LTA is case in point.
So the pros and cons will inevitably change .

Mistermeaner

We have sipps for ours. not paying in loads just £50 each per month

Our thinking was that their shorter term needs (school, college, cars, uni, house deposit etc.) is best met from our earnings / savings (e.g. when the youngest is 18 I will be hitting pension age) and we would rather keep control of the money ourselves than put it into a JISA which they have unfettered access to at 18

Who knows what wil happen with SIPPs in the future (long term future) but maybe at least opening one for them could be useful in case they get phased out at some point (but historic rights retained)

I also plan at a suitable point in time to sit each of them down and talk to them about the value and importance of pensions with hopefully a nice little pile of money I can show them is theirs, show them how much the government paid in and how their investments grew over time.... they can then hopefully choose to continue investing of their own accord

Workerdrone

Opened Fidelity SIPPS for our two 3 years ago. Their grandparents have kindly paid in 6k each so far (including tax relief). I don't ever see our two being high earners so as they were happy to do it, it seem sensible to give that money longer to grow. Kids were at the time 9 and 11

homestraight

Thanks for the comments everyone. Some useful food for thought. 
Will likely have the shorter/medium term costs covered by our earnings/ grandparents