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PENSIONS FOR GRANDCHILDREN
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I must have a weird one. She got money at 18 and we have had to encourage her - at 22 - to use some of it to take up a fab opportunity for work experience abroad.I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
& Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
All views are my own and not the official line of MoneySavingExpert.0 -
Marcon said:Albermarle said:The counterpoint to this (putting the money in a savings account instead of a SIPP) is usually 'but they could empty the entire pot at 18 years old and blow it in a few months on nights out, takeaways and designer clothing.'
There is always an assumption that this would be 100% a bad thing.
However blowing some money on enjoying yourself when you are young is part of life.
A compromise is to build up some in a pot ( JISA etc) for them, but keep some back for a later date.
I am an Independent Financial Adviser (IFA). Any posts on here are for information and discussion purposes only and should not be seen as financial advice.0 -
Exodi said:Marcon said:You'll get plenty of people telling you not to do it: https://forums.moneysavingexpert.com/discussion/6530199/junior-sipp#latest
...but when your grandchildren get into their 70s and want to retire, they'll remember you with considerable gratitude, especially if they are still having to pay rent...
I'm sure some would be more grateful at the assistance buying their first car, or putting a deposit down on their first house, than an addition to their pension pot which they won't see until retirement.
The counterpoint to this (putting the money in a savings account instead of a SIPP) is usually 'but they could empty the entire pot at 18 years old and blow it in a few months on nights out, takeaways and designer clothing.' - which I'd wholeheartedly agree with, which is why my suggestion is always to invest the money in your own name and gift it to them when the time is right. I guess we're (un)fortunate enough that my wife and I aren't able to max out both of our ISA allowances every year.
If I were in your shoes I would not provide for their pensions but instead provide them with the funds which will help them when they are so much younger and will actually need it. If you enable your grandchildren to buy a home of their own they will be in a far better position to make the pension contributions that they need to as they would have likely got onto the property ladder sooner.
You are opening up so many more opportunities for them by providing them with the funds when they are younger.
You are a kind and generous person and I know if I was one of your grandchildren and I know having a reliable car or money towards a deposit for a place of my own would mean so much more to me than an extra x thousand pounds in my pension decades later.
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caveman8006 said:Might be worth thinking about the IHT implications though...these payments could be liable for IHT if you don't survive them for 7 years unless you can demonstrate that they are out of "excess income" and you intend to continue them indefinitely. Worth putting some paperwork into place if you go this route0
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Keep_pedalling said:caveman8006 said:Might be worth thinking about the IHT implications though...these payments could be liable for IHT if you don't survive them for 7 years unless you can demonstrate that they are out of "excess income" and you intend to continue them indefinitely. Worth putting some paperwork into place if you go this route0
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wjr4 said:Marcon said:Albermarle said:The counterpoint to this (putting the money in a savings account instead of a SIPP) is usually 'but they could empty the entire pot at 18 years old and blow it in a few months on nights out, takeaways and designer clothing.'
There is always an assumption that this would be 100% a bad thing.
However blowing some money on enjoying yourself when you are young is part of life.
A compromise is to build up some in a pot ( JISA etc) for them, but keep some back for a later date.
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