START A PENSION ... FOR YOUR GRANDCHILD!

IT’S not just your own retirement you might want to provide for. It is becoming increasingly popular to put money aside for the youngest members of the family. Any individual can receive at least a £3,600 gross contribution at a net cost of £2,880 (which means you pay in the lower amount and the remainder is topped up by tax relief so pension contributions could be made for adult children or even your grandchildren. The danger with saving into a pension for children is political, says Patrick Connolly advice firm Chase de Vere. ‘A potential risk is at the pension rules and regulations could change in the future. The Government is already reviewing tax relief benefits, which could potentially be reduced, and there are

no guarantees they won’t review and change other pension rules in the future. It is difficult to predict how the pension landscape will look in the next couple of years, let alone in the decades ahead, which is how long younger people will have to wait until they’re able to get their hands on their pensions.’ The Government is also forever tinkering with the ages at which pensions can be taken. Today, someone aged 55 can access their fund and spend it as they wish. Anyone aged 40 today will have to wait until they’re 58 to gain access to theirs. This means you will be putting money into your child’s pension without knowing for certain when they will be able to get their hands on it. With that in mind, you might want to save for your child in a more accessible way, such as a Junior Isa. This tax year, you can invest up to £4,080 in cash, stocks and shares or a combination of both. The latest figures reported in August showed 76,000 new Junior Isa accounts were opened in the last tax year, taking the total number to 510,000. The vast majority — 365,000 — are held in cash with the rest in stocks and shares accounts. Hannah Edwards, of BRI Wealth Management, says: ‘For long-term saving cash is not the place for your money. If you’re putting money aside earmarked for retirement, or even if it’s just until the child is 18, a stocks and shares account will have far greater potential for returns.’