Contributions of just £2,880 per annum until Lucas is 18 could equate to a pension fund of over £600,000 when Lucas reaches 55 if it grows by 5% each year. From 58, Lucas has the option to withdraw up to 25% of the fund (£150,000) tax free. (The current minimum pension age for taking benefits from a private pension is age 55. This is expected to increase to 57 in 2028).
Regular gifts made from ‘normal expenditure out of income’ will also be excluded from Ulrik and Silvia’s estate for inheritance tax purposes.