Pensions for children

Click here to find out about the changes to SIPP regulations.

 

Most of us would never think it possible to make our children or grandchildren millionaires, but thanks to current pensions legislation, it is not only possible, but it can also help your inheritance tax planning.

 

Most parents and grandparents understand the importance of saving to secure a comfortable future for their children and grandchildren – not only for the early years but also for their long term future. And starting to invest for a child’s future early on can have a wonderfully beneficial effect on their financial future.

 

Savings accounts are excellent for instilling early saving habits in youngsters, while Child Trust Funds and ISAs can be very helpful in paying for future educational costs, buying a first car or helping them take the first step on the property ladder. However, one area of financial planning for children not considered by many is saving towards a pension. Yet investing in a pension for a child could be one of the most valuable gifts you can give them – one that will provide years of financial benefit.

 

If you have ever wished that you'd started making provision for your own retirement earlier you will understand the importance of making sure that your children or grandchildren are well provided for when they retire.

 

One of the most significant pension developments of recent years was in 2001 when children became eligible to have a pension plan set up in their own name. And paying £3,600 per annum (gross) into a pension from birth until the child is 18 years old could result in a pension fund of over £1.8 million by age 65*.
(*assuming investment growth rates of 7% pa and charges of 1% pa).