5 December 2007
CHOOSE A LONG-LASTING CHRISTMAS
GIFT, GET THE TAXMAN TO SHARE THE COST, AND GIVE YOUR CHILD A PENSION POT OF NEARLY
£2 MILLION
- Give a child or grandchild a really long-lasting gift –
a pension opened now should take the worry out of his or her retirement.
- Get the taxman to share the cost of the pension with
you – tax relief means the taxman will top up some of your contributions –
but open a pension before April 5 to get the most from this tax break.
- If a total amount of £3,600 a year is invested for a
child for 18 years, his or her pension fund could amount to nearly 2
million pounds by age 65.
Financial services company Alliance
Trust Savings is urging people to forget throwaway presents and, instead, give
a child a pension for Christmas. With Britons wasting billions on unwanted
presents each Christmas, a pension for a child offers many advantages.
It lasts for a lifetime. The combined effect
of years of investment growth and compound interest in a tax-free fund means that
it should grow to a sizeable amount when the child retires. For instance, if
£3,600 a year is invested from birth until the child reaches 18 then, assuming a
growth rate of 6% a year, the pension pot would grow to £1.8m when the child reaches
age 65.
Tax relief means the taxman will add on
£22 to every £78 you invest in a child’s pension (up to a maximum payment of
£2,808 to which HMRC will add £792, making a total amount invested of £3,600
gross). Subscribe before April 5 next year to get the full advantage of this
because tax relief will drop to 20% for basic rate taxpayers from then (the
maximum payment will increase to £2,880 but the HMRC top-up will fall to £720).
Alliance Trust Head of Pensions, Hyman
Wolanski said, “People who want to give a
long-lasting Christmas present that will really help a child in the future
should consider a pension. For a relatively small sum now, you can set up a
child for retirement because of the powerful effect of long-term growth in a
tax-free pension fund. Children, naturally, want presents that give them
instant gratification even though they can lose interest very quickly. However, with a pension for Christmas
securely locked up in a pension fund they will really thank you for this in
later years when they come to appreciate the hard financial facts of life.”
“This
message is beginning to get across to parents and grandparents and we are
seeing a growing number of customers making pension contributions for the very
young. Of course, inflation and charges will reduce the growth and past growth
levels are not a reliable indicator of future performance. However, even a
modest rate of growth ahead of inflation will deliver real value over a long
period. And the fact that the taxman will top up your contribution is the real icing
on the cake,” Wolanski said.
Alliance Trust Savings offers
Self-Invested Personal Pensions (SIPPs) for children that have no set-up charge
but have a modest dealing charge for every investment you make. Anyone over 18
can open a pension on behalf of a child, including parents, grandparents and
other relatives and you can contribute as little as £50. The value of an
investment can go down as well as up and the child may not get back, in the
form of pensions benefits, what you originally invested. Alliance Trust has a
range of pensions to suit different kinds of investors and its share-dealing
SIPP allows you to choose from more than 3,000 investments. Charges and tax
treatment may change in the future.
– ends –
Contacts
Jane Holligan, Media Relations Manager Richard Winder/Anna Schirmer/Anna Moulds Tel +44 (0)1382
306064 Tel +44 (0)20 7490 8828 Mobile 07745 783212 Email alliancetrust@lansons.com Email jane.holligan@alliancetrust.co.uk Web www.alliancetrust.co.uk |
Notes to editors
1.
Alliance Trust Savings (ATS) is a
financial services company that offers ISAs, PEPs, SIPPs and Investment Plans,
including First Steps, a plan for investing for children and SIPPs for children.
The company administers around £5bn of assets on behalf of approximately 46,000
customers (as at 31 July 2007).
2.
Alliance Trust Savings is a top ten
SIPP provider by number of accounts. Alliance Trust Savings’ suite of SIPPs
includes the sharedealing Select SIPP that offers a range of more than 3,000
investment choices, and the Full SIPP, in which you can invest in anything that
HM Revenue & Customs allows, including property, apart from investments
that may give rise to penal tax charges.
3.
Alliance Trust Savings is owned by Alliance
Trust PLC, the
4. Photographs
of Hyman Wolanski are available.