Stakeholder Pension
Financial Advisers Advice
Rather than use a child trust fund consider a payment into a stakeholder pension as this will ensure the 18 year old cannot be means tested under current law and also they don’t have access to cash at age 18.
Consider therefore a 3 week old who receives a donation into their pension scheme from their grandparents. A contribution of £1000 would only cost them £780 – an instant guaranteed growth of over 28%. This is down to the fact that the pension will attract tax relief. It’s only recently that a child was allowed to open a pension, as previously there was a minimum age of 18. All contributions over the years could go to the pension and any inheritances could be drip fed into the pension over the years. Paying the maximum every year into the scheme would mean a total contribution of £64800, which would have cost just £50244 after tax relief.
Expert’s view: Score: 7 out of 10.
Good option given and good point about an 18 year old having access to cash – perhaps not a good idea.
Rather than use a child trust fund consider a payment into a stakeholder pension as this will ensure the 18 year old cannot be means tested under current law and also they don’t have access to cash at age 18.
Consider therefore a 3 week old who receives a donation into their pension scheme from their grandparents. A contribution of £1000 would only cost them £780 – an instant guaranteed growth of over 28%. This is down to the fact that the pension will attract tax relief. It’s only recently that a child was allowed to open a pension, as previously there was a minimum age of 18. All contributions over the years could go to the pension and any inheritances could be drip fed into the pension over the years. Paying the maximum every year into the scheme would mean a total contribution of £64800, which would have cost just £50244 after tax relief.
Expert’s view: Score: 7 out of 10.
Good option given and good point about an 18 year old having access to cash – perhaps not a good idea.
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© 2007 Worldwide Financial Planning - this site is intended for UK investors only
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Registered office; The Old Carriage Works, Moresk Road, Truro, Cornwall, TR1 1DG. Registered in England and Wales No. 3533548. Contact info@wwfp.net or 01872 222 422
© 2007 Worldwide Financial Planning - this site is intended for UK investors only
By clicking on any of the external links within this website you will leave the regulatory site of Worldwide Financial Planning Ltd. Worldwide Financial Planning Ltd are not responsible for the accuracy of the information contained within the linked sites.'