Help your child in retirement - Pensions - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Help your child in retirement

Help your child in retirement

Category: Pensions

Updated: 14/07/2017
First Published: 03/09/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

New research has revealed the significance of helping your child or grandchild save for a pension from birth.

According to research by Skandia, if £240 a month (which equates to £300 a month gross contribution due to Government tax relief on pensions) was put into a child's pension fund from birth until they turned 18, when that child reached 60 they would be a millionaire.

This calculation is based on 6.5% investment growth per annum and no further contributions being made by the child.

Saving into a pension for children sometimes makes more financial sense considering that an inheritance lump sum would be liable to a 55% tax charge on death.

"If a grandparent has surplus pension income then this can be a wasted opportunity from an estate and tax planning perspective. By opening a pension for their grandchild, they can significantly improve the amount their grandchild eventually inherits," said Adrian Walker, Skandia's pension expert.

"Although the money is essentially locked away until the grandchild reaches age 55, once they do have access to the money, it can significantly boost their lifestyle, such as paying off their mortgage and providing a substantial income in retirement, something which will become essential as state support reduces."

What next?

Pensions and Investment advice from TQ Active MoneyUnsure about the suitability of a pension fund?

Request a call back from one of TQ Active Money's pension advisors.

Our partner TQ Active Money offers a service designed to provide straightforward and cost effective investments and pensions advice.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.