Opinion  

All I want for Christmas isn’t you, it’s a pension

Mark Devlin

Mark Devlin

That is the massive effect that compounding can have given the extra investment term. 

At age 18 the pot your client has contributed to is only worth  £12,678, but leaving that to grow until their child is age 65 means it grows to just over five times that amount.

The reality

Most people will want their children to have a smile on their face on Christmas morning which will be hard to achieve by showing them a statement saying where their pension money has been invested. 

But, even if it is not a winning Christmas present idea for your clients, the same result could be achieved by them spending £33.33 net per month on pension contribution, the equivalent of £1.10 a day.

If your clients are in the fortunate position to be able to fully fund their children’s pension, placing £3,600 gross into a pension per year until they are 18, that would give them a massive £459,832 in real terms at age 65. 

So while we get a bit contemplative at this time of year, and look forward to catching up and having a meal with family, this is some real food for thought and could help to wrap up Christmas for many years to come.

Mark Devlin is a senior technical manager at Prudential UK