You are here: Home > Articles for Families > Stakeholder pensions for babies Print this page

Stakeholder pensions for babies

your baby may need a pension already!

Yes, pensions for babies!

This may sound really strange. However, if you’re looking into the future, setting up a stakeholder pension for your little one is a pretty good plan, although admittedly you may not be around to see it bear fruit.

What is a stakeholder pension?

Stakeholder pensions were originally set up to give those on little or no wage (women taking a break from work to have children, people on low pay or the jobless) the chance to add to a pension. This makes things a little fairer and lightens the load on the Government. See here for more information on Stakeholders.

Reasons to set one up for your child:

The scheme is tax-efficient for you and for your baby, which, of course, will mean a lot to him at this stage.

It gives you a chance to invest in something that he won’t be able to waste away once he gets his hands on it.

You can stop and start contributions as you wish, so if your cash situation changes you won’t be penalised for it.

If granny and grandpa have some money to invest, they can pass money that might otherwise be liable for inheritance tax to their grandchildren through a stakeholder.

Everyone can contribute a certain amount (up to 100 % of your annual earnings or in the 2006-7 tax year £215,000, whichever is the greater) to pensions with HM Revenue and Customs adding in the tax you would have paid.

Even if you can’t afford to invest the full allowable amount each year, putting child benefit in for a rather longer period can create a sizeable sum too.

For more on stakeholder pensions see here

Now look at: