Legal & General is promoting the concept of investing child benefits into a stakeholder pension for ...
Legal & General is promoting the concept of investing child benefits into a stakeholder pension for children as an early retirement savings plan.
Research from the group shows that if parents invest the £15.50 per week per child into a stakeholder pension, the maturity value on retirement could be as high as £525,112, assuming annualised growth of 7% and maturity at 65.
Based on today's figures, this would provide a tax-free lump sum of £131,278 at age 65 and an annual income in retirement of £36,632. Factoring in inflation it would still leave the yearly pensions worth £15,303 in today's terms.
The figures are based on child benefit of £15.50 per week and an assumption of RPI increase of 2.5% giving a transfer value at age 18 of £39,219.
Adrian Boulding, director of pensions strategy Legal & General, said: "This shows the value of starting contributions early into a pension. Stakeholder regulations will allow parents to contribute into a pension for the kids and give them a head start in saving for their retirement."
The research comes from a group's Value of a Mum survey, which looked into parent's attitudes on how society could do to improve life for families.
Boulding said: "Our findings on child benefit and stakeholder pensions show what an amazing impact hardworking parents can have on their children's lives, throughout their lives. If nothing else, these findings demonstrate the flexibility and opportunity that the arrival of stakeholder heralds in financial services."
Under the draft regulations for stakeholder, there is no link to earnings for pension contributions and neither is there an age limit, unlike in previous pension arrangements.
Legal & General along with the Engineering Employers Federation, will be hosting 11 regional seminars on the practical implications for employers of the stakeholder pensions over the next two months..
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