Pensions for children

SillySallySo

Myself and my husband have 3 children, we were fortunate enough to pay off our mortgage last October.and have since experienced an increase in savings as we have continued to put what our mortgage payment was aside and want to are the most of this opportunity for all the family, but especially setting up the children as much as possible.

I am starting to think about pension savings for our children, our eldest is 16 in the New year and would like to have a plan in place for him.

Any advice on best products for someone his age, we would like for him to be involved with the process to maximise his financial literacy as he gradually becomes more independent.

TIA.

SillySallySo

Sorry for the typos! 

Workerdrone

I personally use fidelity SIPPS for my two (12 and 14). I also have an HL SIPP for my wife. Both were easy to set up

dunstonh

Any advice on best products for someone his age, we would like for him to be involved with the process to maximise his financial literacy as he gradually becomes more independent.

No advice as that is not allowed.     However, I tend to use stakeholder pensions for children/grandchildren.     Mainly to avoid an 18 year old having the investment functionality of a SIPP and making very bad mistakes.  Stakeholder pensions can largely prevent silly decisions.

Albermarle

SillySallySo said:

Myself and my husband have 3 children, we were fortunate enough to pay off our mortgage last October.and have since experienced an increase in savings as we have continued to put what our mortgage payment was aside and want to are the most of this opportunity for all the family, but especially setting up the children as much as possible.

I am starting to think about pension savings for our children, our eldest is 16 in the New year and would like to have a plan in place for him.

Any advice on best products for someone his age, we would like for him to be involved with the process to maximise his financial literacy as he gradually becomes more independent.

TIA.

Good to think about your children's future. Two points to think about though.

They will not be able to access pension funds probably until they are 60. As they get older they may( will)   prefer money before then , for a car, Uni costs, house deposit etc. Despite the tax advantages of a pension, maybe something less long term might be more suitable .

Second point is do not neglect your own pensions or finances. If these are in a good place, then you can help the children out financially at a later stage anyway. Plus they will be happy to see you enjoying your later years with no money trouble.

xylophone

Access to a pension will be at least forty years away - what about the shorter term?

Presumably your son has a CTF/JISA?

What about a LISA at age 18?

Aviva and Standard Life still offer stakeholder pensions.

Assuming that your son has no relevant earnings, you will be limited to a  net contribution of up to £2880 to a stakeholder/personal pension/SIPP - the provider will claim tax relief of up to £720 and add it to his pot.

https://www.aviva.co.uk/retirement/aviva-stakeholder-pension/

https://www.standardlife.co.uk/pensions/stakeholder-pension

Roger175

Some time ago, in very similar circumstances to what you describe, we set up a Hargreaves Lansdown SIPP for each 3 boys and made some modest regular contributions for the few years. This was back in the mid 'noughies' when everything seemed so rosy.  On reflection, it was a bad mistake! We should have put into something more accessible - they could all have done with the money recently to buy a house, rather than something they won't see until they are nearly 60.

Think long and hard about it, as we really regret doing it. Our position is that we will probably leave a substantial inheritance to our kids in any case and the etc pension we set up will be pretty insignificant, whereas extra deposit money would have made a real difference.

incus432

I opened a Vanguard Personal pension for son (2880 net/3600 gross pa), but only after maxing the Lifetime ISA and contributing to an Iweb Shares ISA  - both of which are obviously more accessible for house deposits etc.

Albermarle

incus432 said:

I opened a Vanguard Personal pension for son (2880 net/3600 gross pa), but only after maxing the Lifetime ISA and contributing to an Iweb Shares ISA  - both of which are obviously more accessible for house deposits etc.

The Op's children are too young for a LISA or a normal ISA.

Usually a Junior S & S ISA is the best route for younger children. A bit more debatable for teenagers, it depends how quickly they might need the money as saving rather than investing is normally recommended for any period < 5 years.

incus432

Ah sorry, missed the ages. Agreed re Junior S&S ISA - rolling into Adult ISA - if likely to be in 5+ years

cloud_dog

SillySallySo said:

Myself and my husband have 3 children, we were fortunate enough to pay off our mortgage last October.and have since experienced an increase in savings as we have continued to put what our mortgage payment was aside and want to are the most of this opportunity for all the family, but especially setting up the children as much as possible.

I am starting to think about pension savings for our children, our eldest is 16 in the New year and would like to have a plan in place for him.

Any advice on best products for someone his age, we would like for him to be involved with the process to maximise his financial literacy as he gradually becomes more independent.

TIA.

As others have touched on it is really more about prioritising.

Do they have JISAs?

And/or accounts in your name for their benefit in their early adult years?

Are University costs a consideration?

Is assisting them (at some point) with purchasing a property a consideration (and potentially utilising a LISA at some point).

If all of the nearer term priorities have been considered then looking at using a pension as an addition to all of this can be useful.

Full disclosure, we did open a pension for ours (when a minor), but this was more of a safeguarding exercise; to ensure one existed, and to allow us a route to contribute should we wish to add money in the future, e.g. possibly mitigate IHT considerations by making payments in advance (in reality this is unlikely to be a reason for us).  It was really about security anf flexibility rather than growing a pot of money