Best Pension For Kids 2015
A great vehicle for long-term children's savings is a stakeholder pension, though they won't be able to access it until they are at least 55 under current legislation. For parents who may already be able to cover the expense of university (and even a deposit for their child's first home), a pension makes sense.
Stakeholder pensions were launched in 2001 and must offer low charges and no-frills minimum standards – making them simple and easy to understand for parents wishing to contribute on behalf of children. They are also tax efficient as you can get tax relief on up to £2,880 each year, in each child's pension.
Our top pick for this year is the Scottish Life Stakeholder pension – also last year's winner – which stood out for its value for money, charging just 0.9%.
Patrick Connolly, a chartered financial planner with Chase de Vere, said: "Scottish Life has great strength within pensions, provides a reliable service, has a good range of investment funds and is supported by a secure parent company in Royal London."
Highly commended in the category was L&G. Nick McBreen, an IFA with Worldwide Financial Planning based in Truro, said that while it may not be "as competitively priced as its rivals, with a maximum annual management charge of 1.5%", its plan "looks good in terms of online functionality and access to projections. It has a pretty good range of funds and the vital ingredient of external funds for the investment mix".
Best Pension For Kids 2015
Winner: Scottish Life
Number of funds within pension: 48
Restrictions: Can invest in a maximum of 35 funds Charging structure: 0.9%
Contact: Via IFAs
Highly commended: L&G
A form of money purchase defined contribution pension launched by the then Labour government in April 2001 with low charges and no-frills minimum standards. Designed to appeal to people on low and middle incomes who wanted to save for retirement but for whom existing pension arrangements were either too expensive or unsuitable, the stakeholder didn’t really take off and looks to be superceded by the National Employee Savings Trust (NEST).
A financial adviser who is not tied to any financial services company (such as a bank or insurance company) and is authorised by the Financial Services Authority (FSA). They can advise on financial products to suit your circumstances. All IFAs have to give consumers the choice of paying by fees or commission and have to explain which would best suit the customer in that particular instance. Also, if commission is paid either by the client or the financial service provider recommended by the IFA, the IFA must disclose what that commission is.
Annual management charge
If you put money in an investment or pension fund, you’ll not only pay a fee when you initially invest (see Allocation Rate) but also a fee every year based on a percentage of the money the fund manages on your behalf. Known as the AMC, the actual percentage varies according to the particular fund, but the industry average for active managed funds is 1.5%.