Parenthood Campaign: Pensions for Babies?

What is the best gift that you can give baby? A rattle? A doll? A pension?

When stakeholder pensions were launched in 2001, it introduced two new concepts:

a)    you can set up a stakeholder personal pension at age 0 and

b)    you can pay a contribution of £3,600 per annum including tax relief even if you have no earnings.

So, when baby is born, you can set up a pension for him or her and contribute £2,880 at birth and each birthday including his/her 18th birthday. Based on a 3% net real rate of return, the lucky baby will have a pension of over £1/4 million at age 55.