Kids pension

[Tn21]

Good topic to bring up. So thank you for the thread and the x-mas draws. 

Reading through other members views and opinions was great. The Jisa and jsipp seem to be a reasonable and a sound idea. 

However I think something totally out of the 'ordinary' ( UK au coins) may be the most fruitful outcome for them in their time. Once the child starts working you can guide them through / encourage them to think long term and work place pensions. In the mean time leading up untill that point a mix of the Jisa/sipp with an allocation of Au coins can give them that boost they will need. 

As the years go on I'm sure there will be opportunities out there in the big bad world so being nimble and versatile can be ideal to capitalise on the potential opportunities.

 

[vand]

I prioritize my daughter's JISA over JSIPP.

 

While the idea of locking money up for 60 years in a tax-deferred wrapper to compound away is a tempting lure, I think the practical advantages of a JSIPP are marginal, and there are even some drawbacks.

 

Firstly, there's no reason at all why you can't compound away for 60 years in an ISA instead of a SIPP. Just because the money is accessible from the age of 18 in an ISA, doesn't preclude it from also just being left in there for just as long as you would in a SIPP.

 

Secondly, you are are almost certain to run into hitting the lifetime allowance limit (£1.05m) if you begin a SIPP early enough and regularly contribute to it.

 

Third, when you child grows into adulthood and is gainfully employed, they would likely be getting much better than the 20% contribution uplift that you are able to realise; between their own employer contribution match and their own tax savings, they could easily be getting 50-60% contribution uplift. 

 

Worse, running into issue #2 because parents gave them a sizeable SIPP before they even entered the workforce will mean that they may be unable to take full advantage of the savings from employer matching and their own tax savings for the duration of their own working career. Imagine they grow up successful and  manage to carve out a successful and high paying career, but have already hit the pension lifetime allowance by the time they're 45. They now have no means of lowering their taxable income and are forced hand over huge amounts of their income to the tax man during their peak career period.

 

 

[Derv]

Hmmm interesting.

Thanks

[Bullionbilly]

8 hours ago, vand said:

I prioritize my daughter's JISA over JSIPP.

 

While the idea of locking money up for 60 years in a tax-deferred wrapper to compound away is a tempting lure, I think the practical advantages of a JSIPP are marginal, and there are even some drawbacks.

 

Firstly, there's no reason at all why you can't compound away for 60 years in an ISA instead of a SIPP. Just because the money is accessible from the age of 18 in an ISA, doesn't preclude it from also just being left in there for just as long as you would in a SIPP.

 

Secondly, you are are almost certain to run into hitting the lifetime allowance limit (£1.05m) if you begin a SIPP early enough and regularly contribute to it.

 

Third, when you child grows into adulthood and is gainfully employed, they would likely be getting much better than the 20% contribution uplift that you are able to realise; between their own employer contribution match and their own tax savings, they could easily be getting 50-60% contribution uplift. 

 

Worse, running into issue #2 because parents gave them a sizeable SIPP before they even entered the workforce will mean that they may be unable to take full advantage of the savings from employer matching and their own tax savings for the duration of their own working career. Imagine they grow up successful and  manage to carve out a successful and high paying career, but have already hit the pension lifetime allowance by the time they're 45. They now have no means of lowering their taxable income and are forced hand over huge amounts of their income to the tax man during their peak career period.

 

 

Which JISA provider did you use ? 

Is this the one they can have for a house deposit or retirement ? 

Looking to sort this out soon and not looked any further since i posted.

Cheers

[vand]

11 minutes ago, Bullionbilly said:

Which JISA provider did you use ? 

Is this the one they can have for a house deposit or retirement ? 

Looking to sort this out soon and not looked any further since i posted.

Cheers

I use YouInvest as a JISA provider, but I also keep the investment strategy simple so there is really no advantage that any provider can offer.

What you are thinking of is the LISA, which is not the same as a JISA.

[Bullionbilly]

23 minutes ago, vand said:

I use YouInvest as a JISA provider, but I also keep the investment strategy simple so there is really no advantage that any provider can offer.

What you are thinking of is the LISA, which is not the same as a JISA.

Do you think the LISA would be better ? im hoping to give her a good sized deposit on a house .

Sorry for all the questions . Ill get off my harris and have a read myself. Just like a few opinions.

Thanks

[vand]

3 minutes ago, Bullionbilly said:

Do you think the LISA would be better ? im hoping to give her a good sized deposit on a house .

Sorry for all the questions . Ill get off my harris and have a read myself. Just like a few opinions.

Thanks

How old is she? 

LISA is for people 18-40

JISA is for under 18s to be converted to a standard ISA and transferred to them on their 18th birthday

You see that there is no age overlap, but imo a LISA is superior to a standard ISA for 18+.

 

[Bullionbilly]

9 minutes ago, vand said:

How old is she? 

LISA is for people 18-40

JISA is for under 18s to be converted to a standard ISA and transferred to them on their 18th birthday

You see that there is no age overlap, but imo a LISA is superior to a standard ISA for 18+.

 

Shes 7 in March. 

Ill get on the laptop tomorrow and have a look around. 👍

[johnno]

In my opinion pensions are a scam and I don't have one myself. Personally property is the way forward. Buy a cheap buy to let using a 25% deposit and leverage he rest using the banks money. Rent it out so it pays itself off in about 20 years time. Buy then the property should have increased in value, no mortgage and rental income when rented. PMs and bricks and mortar is the best I think.