According to an article in Pensions Age (pensionsage.com of 25 July 2023) research from Lubbock Fine, has revealed that the number of families contributing to pensions for under-18s has increased “significantly” over the past three years. The research revealed that the number of families paying into a pension for under-18s increased by 36% from 25,000 to 34,000 between 2018/19 and 2019/20, and another 12% to 38,000 in 2020/21. In addition, the research showed that a total of £67.5m was paid into pensions for under-18s in 2020/21 alone, whilst families who contribute £240 per month into a pension from their child’s birth will give them a pension pot of over £100,000 by the age of 18.
Commenting on the findings, Görkem Gökyigit, Chartered Financial Planner at Lubbock Fine Wealth Management, said: “One of the best things a parent can do for their child is to start a pension for them as soon as possible, if they can afford it. They can have a large part of their retirement sorted by the time they turn 18. Compounding is an enormously powerful force in investment. The longer you can make use of it, the better. Getting 18 years of compounding before your child even gets to university will be a huge benefit to them.”