MARGARET MOORE, 52, has been trying to convince her children to get into the habit of saving as early as possible and start preparing for their retirement.

The nursery school teacher, from Newtownstewart in Co Tyrone, Northern Ireland, says: “My children should be thinking about pensions. I started contributing to mine when I was 21 and was on a final-salary scheme. My children won’t get much from the State by the time they are older. They should be saving now.”

Her fears are heightened by the chosen careers of her children, which do not offer the reassurance of a company pension. Jack, 19, is about to qualify as a joiner, while Oliver, 16, will start an NVQ next year to train as a plumber. Charlotte, her 24-year-old daughter, is a recruitment consultant, but has not been offered the option of a company pension by her employer.

Margaret and her husband, David, 54, are also keen for their children to learn to stand on their own feet. The couple pay for their children’s car insurance, help with Charlotte’s student loan and allow Jack and Oliver to stay in the family home rent-free. Charlotte and Jack admit that they are guilty of assuming that the “bank of mum and dad” will always be there when they are stuck for cash.

Margaret says: “We won’t be able to help our children with money for much longer. Jack and Oliver might be on the minimum wage but they should be saving a little. Charlotte earns more but she still has not started saving.”

The children recently inherited £5,000 each from a relative and Margaret would like them to use the money wisely.

Charlotte graduated with a degree in hotel and tourism management from the University of Ulster and has student loan debt of £12,000. She moved to Dublin in July and is now earning €25,000 (£18,000). She lives with her boyfriend and pays half the rent, €650 a month. She does not save any of her salary at the moment but would like to know how much she should be putting away.

Charlotte aims to buy a house with her boyfriend in Northern Ireland in about three years’ time. Having heeded her mother’s advice, she also wants help with planning her pension. “When should I start a pension and how much should I pay in each month?” she asks. “Should my priority be saving for a house or my pension?”

Jack would love to move out of the family home, if he could afford it.

He earns £160 a week as a trainee joiner, which will increase to about £240 a week in the spring. He does not share his mother’s enthusiasm for financial planning and believes that he is too young to start thinking about a pension. “Whenever I have money, it just seems to go,” he says.

Oliver, the youngest of the Moore siblings, earns £120 a week, but he has managed to put away more than £2,000 in a savings account and intends to use the money to buy a Honda Civic. He will start learning to drive as soon as he turns 17 in January. Like her other two children, Margaret wants Oliver to heed advice about how and when to save, and whether he should start planning for the future.

“They need some sound ground rules that they can follow to help them to become financially independent and enjoy a happy life,” their mother says.

Financial CV Earnings: Charlotte £18,000, Jack £8,320, Oliver £6,240.

Savings: Charlotte £5,000, Jack £5,000, Oliver £7,000.

Objectives: “My children need to start pension and savings plans. and become independent from the bank of mum and dad,” says their mother, Margaret. Charlotte also wants to start saving for a house deposit.

The Moores: what the experts say

CHARLOTTE

Mark Dampier, Hargreaves Lansdown

“Charlotte is lucky to have some cash behind her but I would suggest that she immediately gets into the habit of saving a few pounds every month, preferably by direct debit.

“The craze for youngsters to buy houses is understandable given what has happened over the past ten years. However, that does not mean the next ten years will be anything like the same. This is the best time to start saving because I think there may well be distressed sellers in the property market in a few years’ time.

“However, Charlotte does seem to have one problem. She is earning money in euros but is considering buying a property in Northern Ireland, where the currency is sterling. If you pay all your bills in euros, most of your assets ought to be in euros.

“Her choice of savings account amounts to the same thing. It would be best to save her money in euros in the Republic of Ireland. I suspect that interest rates in euros will be slightly lower, but the exchange rate has gone from €1.46 to €1.39 to the pound in the past few weeks, so perhaps the actual interest rate level should not worry her too much.

“While I can understand that Charlotte may want a property to be a priority, she should not forsake starting saving in a pension. If she can start from a low base now, she will have to put in less later. If she can, she should start squirreling away about £50 a month in a private pension, but do some homework because fund performance is important. If that bewilders her, I would suggest a tracker fund.”

Action plan

Start saving a small amount each month, preferably by direct debit.

Delay buying a house as prices are likely to fall, but save in the meantime.

Start a private pension and aim to put away about £50 a month.

JACK

Philppa Gee, Torquil Clark

“Jack needs to understand more about the money he has coming in and what goes out. Assuming that he pays no housekeeping or bills apart from petrol, he has been frittering away a significant sum each week. The best way of sticking to this is to withdraw the money in cash at the beginning of the week and not use any additional amounts whatsoever.

“The money that Jack has inherited needs careful consideration, especially as he is likely to be self-employed. If he is off sick or unable to keep business coming in, his income will be directly affected.

“He should put £3,000 in a cash Isa and should then start building up an equity holding. A fund would be a decent approach because an expert will manage his investments.

“I understand the comments that Margaret makes about pensions, but I feel that this is a step too far for Jack at this time. The money saved in Isas can always be transferred into a pension at a later date when Jack should have a firmer idea about his career and business expectations. Only then should he start saving for retirement.”

Action plan

Get a better grip on budgeting and stick to tough limits on spending.

Invest inheritance in a long-term savings plan to support him if his income dries up.

OLIVER

Sue Hannums, AWD Chase de Vere

“Oliver is very young to be thinking of saving in a pension and I am not surprised that, at 16, he is not too worried about retirement. However, there is something to be said for starting as soon as possible, even if it is only £20 a month.

“He will receive basic-rate tax relief, so for every £20 invested, the Government will add £5.64. Assuming a return of 7 per cent a year, this would produce a pension fund of £120,305 in 49 years’ time. But even this sum is far short of the total needed for a retirement income of £15,000 a year. This would require a pension pot of at least £886,000, so he would need to start saving £147 a month from the age of 16.

“However, Oliver should remember that he will be able to contribute more when his salary increases, so for now £20 a month is fine.

“It is important for Oliver not to put all his money into this one area. For saving in the short term – five to ten years – he should open a cash Isa. And to invest for the medium-to-long term, he could consider getting into the stock market. This would have to be through his mother because he is under 18.

“As a first step, Oliver could consider a core fund, such as Invesco Perpetual Income, or perhaps a multi-asset fund, such as Miton Arcturus.”

Action plan

Start saving a small amount each month – about £20 – in a pension.

For the medium-to-long term, invest in the stock market through a managed fund.

LINKS

Hargreaves Lansdown: 0117-900 9000, www.hargreaveslansdown.co.uk ; Torquil Clark: 0800 0723186, www.torquilclark.com ; AWD Chase de Vere: 0845 7959112, www.awdplc.com

The Moores’ response

“I am really pleased with the advice,” Margaret says. “They can get on with things themselves now. It will help me to step back, too, and that is very important for me.

“I was hoping that Charlotte’s advice would have covered her student loan. She secretly hopes that it will go away if she is not living in the UK, but she will have a lot of money to pay if and when she returns.”

Jack thought the advice was “dead on”. He says: “I will definitely try to save £100 a week and I think I should be able to stick to it. The pensions advice was dead on, too, and I will try to start contributing soon. But for now I will stick to savings.” The expert’s advice was also well received by Oliver. “It has made me see that I do actually want to start a pension,” he says. “It has given me some good advice on where to go, because I didn’t really know before.”

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