# Child Pensions?



## LeadFarmer (Feb 23, 2011)

It may sound a strange idea, but has anyone got any thoughts/experience with child pensions?

Ive been thinking about starting a pension for my 7yr old son for quite some time now as I know that the sooner you start one the more its eventually worth. It would be nice to give him a helping hand, especially as the state retirement age will only increase in the future.

Most folk advise putting that money into savings instead, so the money is there for whenever your child needs it, but thats not what I'm trying to achieve. Any thought appreciated:thumb:


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## andy665 (Nov 1, 2005)

I recently set one up for our 6 year old, £40 per month - don't think you can start something like this too early

Was going to up the amount we put in to his ISA but theres no guarantee that he'll treat that sensibly when he takes ownership of it - at least with a pension the worst he can do is stop paying in to it when he reaches 18


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## mally (Jul 15, 2006)

Interesting. Is there a minimum payement?


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## andy665 (Nov 1, 2005)

I set ours up with Legal and General - the minimum payment with them is £20 per month but then there is full tax relief on top of that so it becomes either a net contribution of £24 / £28 per month - at 18 the fund becomes Noahs and he has the right to choose what to do with it


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## id_doug (Apr 6, 2011)

I didn't even realise you could do this. We have an ISA each for our twins but like you say there is no guarantee that when they get that they will use it wisely. Might look into the pension idea a little more.

I take it they are very low risk plans?


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## andy665 (Nov 1, 2005)

id_doug said:


> I didn't even realise you could do this. We have an ISA each for our twins but like you say there is no guarantee that when they get that they will use it wisely. Might look into the pension idea a little more.
> 
> I take it they are very low risk plans?


No more risky than any other investment but I think over a 50 - 60 year investment time frame the returns are likely to be pretty favourable - just like any other pensions you can control the risk by determining which type of fund to invest in - we have gone for a slightly higher risk because we're at the very start

We have a Junior ISA for Noah as well and his nan (OH's mother) has got money in trust for him - the rate he's going all of that will be translated into a 911 at 18


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## sfstu (Aug 3, 2010)

i put £25 into each of my three kids savings accounts (linked to mine) each month, hadn't thought of a pension...:thumb:
following this with interest, best companies, deals etc...?
rgds stu


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## id_doug (Apr 6, 2011)

andy665 said:


> No more risky than any other investment but I think over a 50 - 60 year investment time frame the returns are likely to be pretty favourable - just like any other pensions you can control the risk by determining which type of fund to invest in - we have gone for a slightly higher risk because we're at the very start
> 
> We have a Junior ISA for Noah as well and his nan (OH's mother) has got money in trust for him - the rate he's going all of that will be translated into a 911 at 18


Thanks for that. I suppose you can maybe look at a slightly higher risk as these are almost like a bonus kickstart to there pension. However at the same time you would sill like a return and not a loss. Our twins have an ISA account each with us and both sets of Grandparents have savings accounts. They do officially have more money in savings than us. Which to be honest is good for them and tragic for us!


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## LeadFarmer (Feb 23, 2011)

Thanks for the reply Andy. Like yourself, I fear the lack if control I have with my sons savings account when he becomes of age. At least with a pension, when he is 18 I assume the funds have to remain in some kind if pension?

I know that it's an investment that he probably won't begin to appreciate until he's middle aged and starts to think of retirement, but it's possibly the most important investment he can have. I'll look into this a little further now


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## andy665 (Nov 1, 2005)

LeadFarmer said:


> Thanks for the reply Andy. Like yourself, I fear the lack if control I have with my sons savings account when he becomes of age. At least with a pension, when he is 18 I assume the funds have to remain in some kind if pension?
> 
> I know that it's an investment that he probably won't begin to appreciate until he's middle aged and starts to think of retirement, but it's possibly the most important investment he can have. I'll look into this a little further now


I just checked Noahs and its actually with Virgin and not Legal and General - fund is automatically transferred to him on his 18th birthday, he can then continue paying in to it if he wishes - earliest he can access the fund is when he is 55 - a mere 49 years away (when I'll be long gone).

Setting it up took about 5 minutes online - I like stakeholder pensions as they are incredibly flexible - you can reduce, increase, halt payments and even make one off payments as well

I don't notice £20 per month but hopefully I will increase it over time, aiming to increase the payments by 20% per month per year and it will build into a platform for his own retirement planning when he starts to think along those lines


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## LeadFarmer (Feb 23, 2011)

Nice work Andy:thumb:. So do you pay £20 or £40 per month, as you've mentioned both figures? And are there any annual management fees that eat into the fund?


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## Will_G (Jan 23, 2012)

LeadFarmer said:


> And are there any annual management fees that eat into the fund?


This would be my worry about any of these things paying in so little without taking a higher risk profile then any gains would be lost in fees.

I'd of thought if you already hold an ISA it would be best investing in that as if you have a lot saved you'll have better buying power and reduced fees. Then barring any accidents you could transfer out of that into a trust fund or gift it when you want.


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## andy665 (Nov 1, 2005)

Stakeholder pensions have strictly controlled fees, can't remember what they are but not enough to worry about and more than offset by the tax relief on payments into the fund.

We have the ISA for Noah that will become his at 18, hopefully this will be used sensibly by him but ultimately we have no control, the pension fund can't be accessed and the worst he can do is stop paying into it

Hopefully we gave a reasonable balance between giving him a university / car / enjoyment fund and some long term planning

We pay £20 into his pension any myself and OH pay £20 each per month into his ISA s we see the ISA as being more important, the pension is just a decent little extra for him when he turns 18


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## Guest (Dec 29, 2013)

Quite interested in this, i will have to look into it further.


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## empsburna (Apr 5, 2006)

This video might be of help to some.

https://www.hl.co.uk/video/how-to-invest-for-children


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## id_doug (Apr 6, 2011)

empsburna said:


> This video might be of help to some.
> 
> https://www.hl.co.uk/video/how-to-invest-for-children


Some good info in amongst that video. Thank you for sharing :thumb:


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## rkelly113 (Oct 12, 2013)

This is a great idea! I didnt know you could do this. Thanks!


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