Join Today
Results 1 to 5 of 5
  1. #1

    Pension for a baby

    Hi all

    We're new parents (Aug 2015) and already have a Junior ISO for our little one after agreeing that we wanted to save regularly and keep it out of our reach, handing over complete responsibility when HE turns 18 - something we thought long and hard against vs a regular savings account.

    One other thing that came up was setting up a pension. I understand that a pension can be setup at any age, and if we were to contribute 2880 a year, this is then topped up by the government to 3,600 as a tax-back incentive.

    Is this still the case? Is it recommended? We should be able to invest 2880 every year and want to make the best financial security for our little on as possible.

    Obviously we would continue with Junior ISAs and regular savings too, but thinking much more longer term.

    Would appreciate any advice.

  2. #2
    Yes, it is still the case and also, yes it is a good idea if you can afford it. Of course, it is very long term at probably 60 years or so but think of the compounding over that timescale :-)

    It MAY be an even better idea after the Budget in March as there is a lot of speculation that a higher flat-rate tax incentive may be announced to benefit non-taxpayers and BR taxpayers. Only speculation though.

  3. #3
    Junior ISA should be first priority because that can fund a property deposit that will provide benefit for longer. Beyond that, yes pension contributions are of use and have the potential to mostly eliminate the need for him to pay into a pension himself.

    Assuming the 300 a month of gross pension contributions and UK average stock market returns less 0.25% or so in charges, so 4.75%, paying in for 18 years will give a pot size of 102,119 after 18 years of paying in. In today's money terms. Assuming state pension minimum pension taking age has risen to age 60 the pot size on the same assumptions could grow to 717,093 by age 60. Even just using the 4% rule for income that can be taken this would be enough for an income of 28,683 plus later the state pension on top.

  4. #4
    Yeah we do this. Aviva stakeholder pension through Cavendish Online which given the current value seemed to be the cheapest option at the time. Downsides, being a minor there is no online access, just annual statements. As value increases will review...

    Being a very long term investment it is only about a 1/5th of the total monthly savings with the rest going into 6% Halifax Regular Saver and Junior ISA invested in Vanguard LS 100/Newton Global Income [just how it worked out when sorting out schemes...]. With Newton Global Income being the star, should have bought much more of that, DOH

  5. #5
    As long s the Junior Isa is in S&S and not cash, then yes a pension for the child could be in order.

    But I would prioritize the isa. Or would run alongside an investment trust savings plan that you control, as some 18 yr olds are better with money than others.


Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts