A shocking 47% of all working-age women have no pension, says John Greenwood in The Daily Telegraph. But the financial prospects of today’s children look even bleaker.
Child Trust Funds are being phased out altogether at the end of this year, leaving no tax-free savings vehicle for children. So increasing numbers of grandparents and parents are “taking matters into their own hands” and setting up pensions for them.
One provider of children’s Sipps, AJ Bell, has seen a 62% increase in such plans over the past 12 months.
Even people who don’t work (and that includes children) can pay £2,880 into a pension and get 20% tax relief. This means the government will top up the fund with an extra £720 straight away. “The second major factor is… time.”
A single £2,880 contribution on the birth of a child will grow to more than £19,000 in real terms by the time they are 68, assuming the pot grows at 2.5% a year above inflation, net of charges. Pay that in every year until they are 18 and “they should have a fund of around £233,000 by the time they are 60”.