Can you single out a parent as a beneficiary of a child's SIPP?

B0bbyEwing

In short with my help my sister has set up a SIPP for her daughter. 

The only people contributing to this SIPP will be myself & my mother. Nobody else. That isn't a 'we don't want anyone else' stance, but anyone else will be going the 'traditional' way of putting any money in to cash savings that can be accessed instantly.

Some like to bury their head in the sand but I like to be realistic - which involves considering worst case scenarios.

So let's say <something> happens to child & they're no longer here. What we want to know is can the SIPP be set up in a way where the money goes to the mother (my sister) but NOT the father - so she gets 100% & not a 50/50 split?

The relationship is certainly not the strongest one & they may or may not be together in 1-2-3-4 etc years time.
Even if they are then we're putting that money in for the child and as it would have to go somewhere then my sister. We would not want it to go to the father. We don't dislike the lad, it's just our personal preference.

Or is there absolutely no way whatsoever of stopping that and it would have to be split 50/50 in absolutely any scenario (as in whether they're together or not, married or not)?

xylophone

It should be remembered that it is the Trustees of the pension who have the final say. 


I was looking at the T&Cs of the Hartley pensions Junior SIPP

Does a beneficiary have to be chosen to receive the Junior SIPP if the child dies? 

No. This is not legally required but we strongly recommend that you inform us of your child’s wishes to help ensure we consider paying the correct beneficiaries. 

Your sister should consult the T&Cs of the SIPP provider.

IanManc

The SIPP is the property of the child, not of the people who are contributing to it.

How old is the child? Is she even old enough to know she's got a SIPP?

As it is her pension, she gets to choose who gets the money if she dies. If she is old enough to understand that she has a SIPP and form an opinion on what should be done with it if she died, then she would be able to make a nomination. Would she be happy to see her father cut out of getting any proceeds from the SIPP?

If she isn't old enough to have a view on what should happen, then the trustees will distribute the funds as they feel appropriate. I doubt that, absent instructions of the SIPP holder, the trustees will be swayed by some relatives propounding that one of their number should get the lot and that another relative with an equally close blood relationship to the child should be cut out.

B0bbyEwing

As the child isn't even 1 yet.... At what point are they deemed old enough to be able to form an opinion? 

TrusteeS will no doubt be the parents then? 

So are you saying that it would automatically go to the pair of them, even if the beneficiary field (if there is one - haven't looked (Fidelity)) states 1 persons name - the mother? 

masonic

The trustees will be the people responsible for administering the pension at Fidelity. They will use the expression of wish in their decision making process, but have discretion over whether or not to follow it. They are also able to consider claims from others and judge them on their merits.

Malthusian

As Masonic says the trustees have discretion over who receives any death benefits.

Normally the trustees would look at the member's expression of wish and would follow it if there were no good reasons not to. But we can forget about that for a 0-year-old. 

I would start from the assumption that any death benefits will be split 50/50 between the parents, because as it stands they are both her parents and guardians. There is no suggestion that won't remain the case even if the parents separate. The fact that the people who put the money in didn't like the father isn't a reason for the trustees to not split the death benefits of a child between both parents. If that puts you off, use another inheritance vehicle. (E.g. if you invest the money intended for the child in your own name, and amend your Will accordingly, then if the child dies, the money remains yours.)

If a parent was completely estranged and had no relationship with their child for many years, it is more likely that the trustees would exclude them from death benefits.

B0bbyEwing

Thanks for the responses. Helpful. 

Investing in own name is now looking more appealing. 

Obviously it's just easier in the child's name. Everything stays invested until retirement. 

How do you go about doing it in your own name? The only way I can think of would be you'd invest in a S&S ISA & then come time that you want to hand the money over, you'd have to sell your investments, withdraw, hand over in cash, request that the (now adult) puts it in to a pension which hopefully they would but could easily spend it on Domino's pizzas (other pizzas are available). 

Further to this - you'd have to select an investment that isn't one you already hold, otherwise there'd be no way of knowing how much is theirs & how much is yours, surely? For example, if I'm invested in Fidelity Index World P which I am then it's no good putting their money in that fund too because it just becomes one, so I'd have to look for an alternative.

Is there another way to this or is that the only way? 

EthicsGradient

If the parents were to have another child (which seems quite possible, with this child being so young), I wonder if the trustees would see that child (or children) as the best beneficiaries - even if they could not yet access it. And you may well feel that way yourself.

Reed_Richards

B0bbyEwing said:

Investing in own name is now looking more appealing. 

Obviously it's just easier in the child's name. Everything stays invested until retirement. 
 

Are you sure you're not letting the tail wag the dog here?  You're rejecting the obvious choice of investment because of what, hopefully, is a very unlikely scenario.

dunstonh

Many providers will accept a written expression of wish. i.e. an explanation and rationale.    The trustees are still not required to follow it but it giving them an explanation helps eliminate issues.

Notepad_Phil

B0bbyEwing said:

...
How do you go about doing it in your own name? The only way I can think of would be you'd invest in a S&S ISA & then come time that you want to hand the money over, you'd have to sell your investments, withdraw, hand over in cash, request that the (now adult) puts it in to a pension which hopefully they would but could easily spend it on Domino's pizzas (other pizzas are available). 

To me a S&S ISA is the obvious way to do this - you'd probably also want to update your will to take account of it as well, just in case anything happens to you. If you do find out that they prefer eating pizza to putting it into a pension then you would have the ability to defer giving them the money until a later date. Using an ISA rather than a SIPP might also help if other children come along, you just add more money to the ISA rather than having to open new SIPPs.

B0bbyEwing said:

Further to this - you'd have to select an investment that isn't one you already hold, otherwise there'd be no way of knowing how much is theirs & how much is yours, surely? For example, if I'm invested in Fidelity Index World P which I am then it's no good putting their money in that fund too because it just becomes one, so I'd have to look for an alternative.

You could keep a record of how many units you've bought for the child, but it probably is much easier to just buy another all world index, something like the HSBC All World index tracker might be a candidate.

B0bbyEwing said:

Is there another way to this or is that the only way? 

Using either a SIPP or ISA type product is the way I would go, but a SIPP seems to me to be very restrictive in when the child can actually use the benefit of your generosity, maybe in 20 years time you'll want to help them on the first rung of the housing market, but there's no way to do it if the cash is all in a SIPP which they can't access for another multiple decades.