Martin Lewis issues pensions alert to anyone with | European Markets

Martin Lewis has issued an important pensions alert to everybody within the UK who has youngsters.

The MoneySavingExpert (MSE) founder is urging dad and mom to open a pension for his or her youngsters to make sure they’ve a useful financial savings pot when they’re older.

Lewis says nearly anybody can save into a pension – even when they’ve no income – which means even a new child child can have a pension.

The advice comes as half of Lewis’ bumper pensions suggestions and methods in his latest MSE publication this week, which explains some must-knows to spice up personal and work pensions by 1000’s earlier than you retire.

Lewis stresses that the sooner you begin saving into a pension the higher because it provides you more time to grow your retirement fund. Whereas he cautions that you must look after your own funds first, he says that oldsters who’re ready ought to take into account opening a pension for his or her youngsters as “saving for retirement is crucial”.

Writing in his latest publication, he stated: “Children can have pensions too! Almost anyone can save into a pension and get tax relief, even if they’ve little or no income. The minimum allowance is £3,600/yr (meaning it only costs you £2,880). This means even a newborn baby can get a pension.

“And certainly I do know grandparents who open them for his or her grandchildren, liking the concept it’s going to set off a reminiscence of them in 50 years’ time.

“The advantage of this is as the earlier you start, the more time it has to grow, so starting super young should be very valuable once your ickle ones are old ‘uns like me. It’s no surprise that more than a couple of kids of the parents in MSE Towers have pensions.

“Nonetheless, I might warning to all the time first look after your own funds, then take a look at high youngsters’s financial savings and fill up a junior ISA, as they’re shorter-term priorities. But should you’re fortunate enough to have enough to try this, then a pension for the youngsters could also be a good option.”

Financial advice firm St. James’s Place says a child can have a pension from birth as there is no minimum age, but only a parent or guardian can set one up. However, once it’s up and running, anyone can contribute to it, including grandparents, godparents, friends or other family members.

Parents or guardians will look after the pension until the child turns 18, at which point control will pass to them but they won’t be able to access the money in their pension until they reach the minimum pension age.

The firm explains: “Like an grownup pension, eligible contributions obtain a 20% increase from the federal government – though your little one is just not but a taxpayer. This tax aid from the federal government is one thing you gained’t get from an ISA, one other tax-efficient saving software.

“In addition, any growth generated within the pension won’t be subject to Income Tax or Capital Gains Tax. A pension will of course be subject to income tax when it is accessed in future years.

“As a little one will not often have earnings, you’ll be able to often solely pay up to £2,880 into a little one’s pension for the 2024/25 tax yr. If you issue within the 20% in tax aid from the federal government, this provides up to £3,600.

“Saving into a child’s pension is a rewarding way to spread your wealth among your children and grandchildren. And it’s a gift that keeps on giving, since it helps mitigate an Inheritance Tax (IHT) liability by reducing the size of your estate. Payments may be covered by the annual £3,000 tax-free gifting allowance, or the exemption for regular payments if made out of surplus income.”