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Hope this is on-topic for here.

I'm looking for some advice on the best way to handle a pension. I would like to have the money paid into an account for my 15-year old daughter. The lump sum is about £10,000, and there would be a monthly income of around £330.

The problem I have is that from searching around, it seems that any account that gives anything like a decent interest rate is either only for adults (ie over 16, which she isn't) or has a maximum of £100 monthly income.

She doesn't have any other income, and we aren't anticipating any for her for the next few years.

Anyone able to advise what would be a good way to handle this? She doesn't need instant access to the money.

We're in the UK.

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    Reality check: 330/month is 4000/year, which is 40% of the PV. It's much more likely that 10,000 will earn 330/year, not per month. Or is the "lump sum" a separate payment and unrelated to the monthly?
    – Ben Voigt
    Feb 28 at 22:45
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    @BenVoigt The £10K is a lump sum, separate from the monthly amount. Thanks Feb 28 at 22:51
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    in para 2 you mention a pension, is this the source of the funds you want to give to your daughter?
    – AakashM
    Feb 28 at 23:03
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    I have to mention that if this is your pension you are about to receive, and you are hoping to avoid paying tax on it by transferring it to your daughter, that won't work. Pensions are your income and can't be transferred except in very exceptional circumstances. You can of course give your daughter the money after you have paid the tax on it. Feb 29 at 0:27
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    @DJClayworth Thanks for pointing that out. No, I'm not trying to avoid tax here, I just want to give my daughter something to get her going in life. I leave the tax stuff to my accountant. Feb 29 at 14:05

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Note that if your child makes more than £100/year in interest from money you give them, then you have to pay tax on it anyway. [A previous version of my answer talked about £100/month because I got months and years mixed up :-)]

You can use a Junior ISA which doesn't have that problem, it looks like there are some around offering 4-5% interest right now.

You can also consider taking more risk with the money by investing it in stocks (like an index fund) if it won't be needed for a few years and it wouldn't be a disaster if some was lost.

Remember that anything you put in her name now becomes hers to do what she wants with when she reaches 18.

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  • Thanks for that, a junior ISA looks like a good option. Need to do some reading. Feb 28 at 22:58

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