Stake holder pension for child

wattosavelots

HI there,

I'm in the process of looking for a stake holder pension for my son who is 2, so I realise his retirement is a long way off

I see that halifax do one for the under 18's which then reverts to the child's control when they're 18, so hopefully he will keep up the payments into it!

Does anyone know of anyother providers that have a stakeholder for under 18's? If I were to open one with another provider who doesn't have one specifically for the under 18's, (for example my bank) would he be able to take over paying into it when he's 18?

Sorry for the ramble hope it makes sense to you.

dunstonh

Does anyone know of anyother providers that have a stakeholder for under 18's?

Every stakeholder and virtually every personal pension available does.

Never buy a bank product unless you like paying high charges and having poor quality funds.

Blowsy

dunstonh already covered it but you might find this little snippet of interest...

You and other family members can contribute up to £300 gross per month (£234 net) for your son.

If you'd started paying £234 per month into a stakeholder scheme when he was born until age 16, the fund would be worth £95,000 when he reached age 16 (assuming growth rates of 7% pa and a 1% annual mgmt charge). Astonishingly, if you then stop payments completely, the fund would be worth c£1.2m by the time he reaches age 60 (assuming same growth rates and charges).

Now the great stuff...
If you don't set up a pension scheme for him and he starts paying into his own pension at age 25 he would need to contribute £900 per month to have the same fund value at age 60!!!

That's the power of compound interest.

Retired_I.F.A.

A 1.2 million pension pot in 60 years is worth 103k today.

That's the power of inflation at 4%.

I cant think of a more stupid thing to do for a baby than a pension plan.

Blowsy

So on that basis you're saying that any long-term investment is a waste of time??

You'd certainly hope that the "child" would contribute himself at some stage rather than sitting on the £57,600 invested by the family for 44 yrs.

Retired_I.F.A.

If a parent has the means to provide for all needs wants and eventualities for a child then yes bung other surplus cash into a pension for it but 'all' is a blooming big word even millionaires cant afford.

Rod1883

On a related topic I am contributing ~£65/month into an AXA Stakeholder pension for my daughter (now 17) and this has been running for a number of years. I am doing this to give my daughter's pension a start and hopefully engender a pension saving mentality early in her working life.
I know that a stakeholder 'suffers' only low charges, but I am wondering if there is a way to reduce further or save these charges completely.
I already had an AXA FSAVC (now transferred elsewhere), and the IFA that I originally set up my AVC and my daughter's plan through has had many years of commission, and has recently retired handing his portfolio on to another company to whom I have no affiliation.
I would therefore like to understand if there is a way I can save the commission on my daughters stakeholder pension and let it boost the retirement fund.
Does anyone have any advice on how I might go about doing this?

Rod.

dunstonh

I already had an AXA FSAVC (now transferred elsewhere), and the IFA that I originally set up my AVC and my daughter's plan through has had many years of commission

Yes. All those 10p per contribution after year 5 go a long way

I would therefore like to understand if there is a way I can save the commission on my daughters stakeholder pension and let it boost the retirement fund.

You can either switch to another stakeholder on execution only terms or better still a personal pension (which could be a lot cheaper - although gross premium would need to go up to £100pm). At her age stakeholder is not the cheapest option.

Andy_L

Blowsy wrote: »

So on that basis you're saying that any long-term investment is a waste of time??

You'd certainly hope that the "child" would contribute himself at some stage rather than sitting on the £57,600 invested by the family for 44 yrs.

It's a question that crops up fairly often

Is a pension, with restrictive, changable conditions (eg unacessable till 50, rising to 55, rising to who knows what in 55 years) which in a, morbid, worst case will never be of benefit to the child a better or worse option than a more flexible investment vehicle which could be used to pay for University/House deposit or be ultimatly moved into a pension if the tax situation makes it worthwhile.

If you can only afford one then I (and apparently Reired IFA) favor the latter but YMMV and all that

The ISAvs Pension sticky covers the pros & cons

Blowsy

Andy_L wrote: »

It's a question that crops up fairly often

Is a pension, with restrictive, changable conditions (eg unacessable till 50, rising to 55, rising to who knows what in 55 years) which in a, morbid, worst case will never be of benefit to the child a better or worse option than a more flexible investment vehicle which could be used to pay for University/House deposit or be ultimatly moved into a pension if the tax situation makes it worthwhile.

If you can only afford one then I (and apparently Reired IFA) favor the latter but YMMV and all that

The ISAvs Pension sticky covers the pros & cons

Fully understand where you're coming from but on the basis that the original post suggest he was looking for a stakeholder pension for his 2 yr old son I imagine his mind's made up

surfsister

so any recomendations as to where to get the stakeholder pension from? Apart from the bank as someone said it was too expensive?