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Routine, money and time can have a powerful effect

01 May 2024

The spring bank holidays this year seem more evenly spaced than in recent times, meaning that those at work, or those with younger generations in education, have less interruption to their diaries and normal routines. Some may welcome this year's position, some may not.

Routines overall are normally a good thing, or at least they provide a disciplined framework to achieve a chosen outcome in a time bound fashion. I am beginning to sound like a business mentor; however, focusing on a task to achieve a positive outcome is usually accepted as a way forward. Sadly, we cannot all achieve fame and fortune in an instant, but perhaps over time.

There have been many financial (and other) articles written on the possible transfer of wealth in the UK to younger generations. This may prove to be the case over time, although there might be other issues, such as long-term care costs, that may slow or reduce any planned gifting.Therefore, the routine, indeed discipline, of building up wealth directly in the names of individual members of younger generations becomes ever more important. Young people may not have much money, but they do have the advantage of time.

Of course, it must be noted that the cost of living and inflation (although the latter is now ebbing) have been high in recent years, and making ends meet is still difficult. The ability of the state to provide State Pension benefits at the current level is also not getting any easier, so having your own funds for the future might make a real difference.

As an example, starting a pension early offers many advantages. And by early, a baby can have a pension plan, although they perhaps won't thank a parent or grandparent for it. Even small regular contributions can make a real difference in the future. The minimum retirement age is increasing from age 55 to 57 from 2028, and likely further thereafter. Therefore, and as an example, a parent / grandparent saving into a pension for a child from birth would have 57 years of investment before the earliest point that a fund can be accessed. The current maximum contribution that can be made into a pension on a de-minimis basis (for someone with no pensionable earnings) is £2,880 pa net / £3,600 pa gross.

Based on current legislation, a pension contribution also attracts basic rate tax relief (20%), and any growth achieved is tax efficient. We looked at an example of paying £20 per month net into a pension, from birth to an age of 60. The indicated value of the pension fund, with investment in line with a balanced attitude to investment risk, might be £22,600 at the child's age of 60 (not guaranteed). Certainly worth considering as a long term option for both parents and grandparents alike.


Wealth transfer to future generations is important and is likely to grow in relevance as we look forward. However, this does not have to be vast sums of money. Just a small contribution on a regular basis can make a real difference over the decades.

We hope you find more exciting things to think about as we approach the next bank holiday, although taking a break from saving for the future might prove costly.

No individual advice is provided during the course of this blog.

Keith Churchouse FPFS
CFP Chartered FCSI
Chartered Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899

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