Invest in a Stakeholder Pension for your child

Theresa Hudson

Annoyingly Organised
Joined
Mar 2, 2000
Messages
78
I have been looking at ways to invest for Dana and I thought I would share this with you.

I pay £25 a month in to a ‘Friendly’ policy, which now I am a wiser person, I know the returns are not that good. Although, I will probably keep this going and I fairly sure I am also going to invest in a Stakeholder pension.

Many people do not know that you can start a Stakeholder pension for your child, to give them a head start in the pension ‘game.’ The contribution does not have to be huge only £20/£25 a month (before tax relief) will be a great start for your child, especially with the miracle of compound interest

Keying in numbers on the Legal& General pensions calculator and I thought some people might be interested in the results:

Paying £100 per month (and not increasing it over the period!) into a stakeholder for a boy aged 5 until his 18th birthday, gives a pension at age 65 of £416 per month (in today's money). At £96 per week that's slightly over the current "MIG" (minimum income guarantee) of £92.50 (which I can't imagine will still be around by the time our children are 65!)

You would never have to bother about the £100 "interest limit" (e.g. gift from parent to child) or CGT or anything else - in fact, the government would be putting basic rate tax relief onto your contributions!
 















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