Parents are being advised to save any surplus pension income, depositing it into a specific pension for their children, as a way of increasing the amount of inheritance they will eventually receive.
Usually, children will only receive less than half of the value of their parents’ estate, after Inheritance Tax and other outstanding debts have been paid. However, should their parents plan their estate carefully whilst still alive, this amount can be increased.
This is becoming increasingly relevant, when adult children aren’t able to save enough for their own retirement. The money put aside into the pension scheme means they aren’t able to touch it until the age of 55, when they can then use it to help them pay off any outstanding bills or their mortgage.
This form of financial planning means that the adult child becomes subject to tax relief and could see savings of several thousand pounds build up within a relatively small amount of time.