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PENSIONS FOR KIDS
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Did you know that since the introduction of Stakeholder Pension Schemes, in April 2001, it has been possible to contribute into a pension scheme for a child?
This change has revolutionised pension planning.
No longer should it be the case, that pension planning should start in one's 20's, 30's and in many cases even later on in life.
It will become the norm that parents will start to make modest contributions into their children's pension scheme, just in the same way as some parents open bank and building society accounts for their children to save.
By the time your children start to work, you may have already built up a sizeable pension fund for them. If a child has a pension fund in place, parents may find it easier to encourage their children to continue saving for their retirement, once they start working.
How many of our parents told us to start a pension fund, I know mine didn't.
What's more, contributions receive tax relief at basic rate, provided the payee is a taxpayer. The maximum annual contribution is currently £3,600 gross. You pay a net contribution of £2,808 and £3,600 is credited to the child's pension fund.
Of course you don't need to contribute the maximum, you could do as little as £20 per month.
One last thing to consider. Those currently not in employment are also eligible to contribute into a Stakeholder Pension Scheme. In the past you needed to have Net Relevant Earnings in order to contribute into a pension scheme.
House persons for example can now keep up with their retirement planning. How many women have there been that have stopped work in order to bring up a family, and as a consequence have stopped their pension contributions.
I have many clients, who fund a Stakeholder Pension Scheme for their spouse and children.
Please let me know if you would like any further information on Stakeholder Pension Schemes, or if you would like an illustration based on your child's/spouses criteria.
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