Safe way to pass on cash

GRANDPARENTS are increasingly saving into grandchildren's pensions as a tax-efficient way to pass on wealth.

- By Harvey Jones

The number of under-18s with pensions climbed to 45,000 in the 2022/23 tax year, up from 42,000 the previous year, as families wake up to the benefits, say new figures from Lubbock Fine Wealth Management.

Contributions to children's pensions rose almost 5% to £79.6million and Lubbock Fine director Andrew Tricker said parents and grandparents are driving the change. “Pension contributions for minors are growing because older family members are seeing those pensions as an inheritance-tax tool.”

Families are keen to act because from April 2027, pensions inherited on death will no longer be free of IHT, removing a perk many relied on.

Tricker added: “More obviously it’s a good way of jump-starting your own child's pension fund.”