Pensions Advice for 19 Year Old

af1963

If she's working at close to the national min wage, and the employers scheme uses salary sacrifice, she may be limited in how much she can contribute to that scheme by salary sacrifice, as she can't sacrifice down to below NMW.  No such restriction if it isn't a salary sacrifice scheme, or for a SIPP.

Another route worth considering might be to set up, or add to an existing, SIPP in your own name.  Even if you don't need to touch it because you have good DB pensions, it builds a fund that can be inherited, and your daughter named as a chosen beneficiary.  And in the meantime it could let *you* benefit from the tax relief, maybe at a higher rate ?  You'd need to consider this alongside your other finances, possible IHT etc, but wortth a look?

pauln

Thanks for the advice re LISAs.  I've already put £4k into one of those for her for each of the last two years with the same to come over the next 8 years so it's just the pension I was looking into now.

Does anyone have any recommendations for providers with minimal fees?

Brie

Does she have any "money sense"?  i.e. does she save up to buy things or is a case of spotting something she really really really wants and trying to convince you to give her the money so she can get it NOW?  

While I get it that you want her to start a pension asap being aware of how to budget and what things in the world actually cost might be a much more valuable thing for her to learn.  Too many of us got a credit card at a relatively young age and maxed it out immediately and ended up in debt as a result.  Took me decades to better come to grips with this myself.

pauln

Brie said:

Does she have any "money sense"?  i.e. does she save up to buy things or is a case of spotting something she really really really wants and trying to convince you to give her the money so she can get it NOW?  

While I get it that you want her to start a pension asap being aware of how to budget and what things in the world actually cost might be a much more valuable thing for her to learn.  Too many of us got a credit card at a relatively young age and maxed it out immediately and ended up in debt as a result.  Took me decades to better come to grips with this myself.

She's doesn't have money sense in the sense of knowing about personal finance so the idea of starting a pension wouldn't be on her radar, but she doesn't overspend particularly with the money she does have.

MTB1986

Not contributing to her workplace pension means she misses out on free money from her employer, so I’d say the earlier she joins the better to maximise that. 

kempiejon

pauln said:
She's doesn't have money sense in the sense of knowing about personal finance so the idea of starting a pension wouldn't be on her radar, but she doesn't overspend particularly with the money she does have.

Then what we have here is a teachable moment. I started my pension aged just 20 but I was a funny yoof. I worked it out as a good thing for myself but my mum had instilled thrift as a virtue.

Smudgeismydog

MTB1986 said:

Not contributing to her workplace pension means she misses out on free money from her employer, so I’d say the earlier she joins the better to maximise that. 

Agree with @MTB1986, my son is 19 and on a degree apprenticeship, he has just requested to join his workplace pension for the same reason (they have confirmed he won’t be auto-enrolled just yet due to his age).

It really doesn’t matter if she doesn’t stay there that long, she can pick up her pot and move it to a different provider at a later date, but she should join to receive the employer contributions.

She could make personal contributions (outside of payroll), if you wish to help her add to the pot.

Marcon

pauln said:

Hi, I'm keen to get some pensions advice on behalf of my 19 year old daughter.  She has recently dropped out of university as it wasn't for her and has fallen back into doing what was her weekend job on a full time basis for around the national wage.  She doesn't really know where she's going career wise but I'm keen for her to start a pension whilst she works out what she wants to do.  I understand that her employer has to enrol her into a workplace pension when she's 22 but I'm keen that she starts something now rather than wait 3 years (if she stays there that long). 

I've been fortunate enough to have fallen into a public sector pension scheme all my working life so I'm not best placed to offer her advice. 

She won't be investing very much and we'll add a little bit ourselves but I'm keen for the contributions not to be eaten up by fees.  It also needs to be flexible as she may for example decide to go back to university in the future and may not be able to contribute to the pension during her study years.

Many thanks in advance for any help offered.

...but is she? Your daughter is an adult and learning to take her own decisions (and, unhappily, make her own mistakes) is part of the growing up process. By all means encourage her, but at 19 with no idea of what she's going to do with her future, I'm not sure a pension is the priority you entirely reasonably feel it should be. Maybe saving up to go travelling for six months, or something else which might help her mature in general terms, and also get over dropping out of university - which will have been a big deal for her as well as you - would be a better idea?