Starting a pension fund for adult children

NormalNorman

Started pension when it was born and still paying in 18 years later. Not sure when I’ll cease contributing. Now the JISA has been handed over ceased saving into that. It gets uni paid for with a food allowance and our old car so that’s enough. Drawing a line at my second job. 

poseidon1

NormalNorman said:

Started pension when it was born and still paying in 18 years later. Not sure when I’ll cease contributing. Now the JISA has been handed over ceased saving into that. It gets uni paid for with a food allowance and our old car so that’s enough. Drawing a line at my second job. 

You were a remarkable early adopter of pension funding for baby offspring.

Invested aggressively and hopefully significantly enhanced by your child's own future pension funding in the next 32 years, they ( unlike most of peers) would have a fighting chance of the choice to retire well before an ever receding state pension age, without having to look over your shoulders waiting for inheritance.

NormalNorman

poseidon1 said:

NormalNorman said:

Started pension when it was born and still paying in 18 years later. Not sure when I’ll cease contributing. Now the JISA has been handed over ceased saving into that. It gets uni paid for with a food allowance and our old car so that’s enough. Drawing a line at my second job. 

You were a remarkable early adopter of pension funding for baby offspring.

Invested aggressively and hopefully significantly enhanced by your child's own future pension funding in the next 32 years, they ( unlike most of peers) would have a fighting chance of the choice to retire well before an ever receding state pension age, without having to look over your shoulders waiting for inheritance.

Of course, been trying to instil the importance of pension planning but not really interested although savings mad which is great. Property is of course forefront of mind. Cheers!

NormalNorman

Payments from myself into junior’s pension show as third party contributions. Is this because of tax relief reasons?

DRS1

NormalNorman said:

Payments from myself into junior’s pension show as third party contributions. Is this because of tax relief reasons?

I am assuming you don't get tax relief on contributions you make.  If you gave the money to junior and they contributed then the contribution would get tax relief.

NormalNorman

DRS1 said:

NormalNorman said:

Payments from myself into junior’s pension show as third party contributions. Is this because of tax relief reasons?

I am assuming you don't get tax relief on contributions you make.  If you gave the money to junior and they contributed then the contribution would get tax relief.

I think the tax relief comes out of my allowance. Must dig out the documents to check but since they turned 18 I lost access to the app as you would expect. Cheers!

DRS1

Interesting couple of articles.  It seems the contributions you make are treated as made by the child.  I did not know that.

Saving for future generations - Royal London for advisers
Contributing to a children's pension - Royal London for advisers

Kernowshep

I would have thought having the money decades before retirement would be much more beneficial to them (house deposit, car etc.).  S&S ISA is the way I'd go (or possibly LISA).

They can always use it later to subsidise increased pension contributions when they could make use of Sal Sac, HR tax savings, or reduced student loan repayments.

Cornish_mum

Hello OP, I just wanted to throw my experience into the mix. I am a 40 something who undertook extensive postgrad training and didn’t pay into a pension until I was 27. As did my husband. 

As a result of our many degrees we now both earn a decent salary. We are both on track to reach the old LTA by our target retirement age (late 50’s). As we are both HR tax payers, pension contributions now are very lucrative for us. 

I would just have a think about your kid’s likely career path/earning potential before helping them in this way, as it may be more sensible for them to contribute later especially if they end up paying HR tax.

We benefited from the “bank of mum and dad”to help us with our wedding costs and a deposit for our first house. Avoiding rent early on in married life was a game changer financially. For my kids I am saving into ISAs for their immediate needs and my own pension for their adult needs (ie house deposit). As this is much more tax efficient in our case. 

Just something to think about 

howard3844

as mentioned in previous comments if the payment is made by "other persons than the account holder", do they get the tax relief. Seems odd if they do ? If so give the money to the "child" and let them invest it.