The lack of a minimum age for taking out a stakeholder, together with the fact that earnings are not required in order to contribute, has opened up a new market for childrens' pensions.

Parents, grandparents and legal guardians can set up a stakeholder for a child, meaning that for the first time, you have the potential to offer retirement planning for the entire family.

The maximum contribution is £3,600 per annum or £2,808 before the addition of basic rate tax relief. In the same way as any other third party payment, tax relief is based on the child's tax status. Higher rate taxpayers cannot therefore pick up higher rate relief on any contributions they make on the child's behalf. However, the non-taxpaying child will be able to pick up basic rate tax relief.

The ability to make one-off lump sum payments to a stakeholder, from as little as £20.00, is particularly beneficial as children often receive money on special occasions. The fact that money can't be accessed until the age of 50 should provide peace of mind that money invested for the child can not be hastily spent or 'frittered away' at a younger age.

Child benefit is available to almost anyone who is bringing up a child under 16 (or 19 if in full-time education excluding higher education).
This benefit is not means-tested. If you do not need the money to provide for the child now you may well consider diverting some or all of the money into a stakeholder on behalf of the child. By doing so you could build up a fairly substantial fund for your child's eventual retirement.

To invest in Stakeholder Pensions for children CLICK HERE.

  Pensionadvice is provided by Priscum Ltd which is authorised & regulated by the Financial Services Authority.No 507387