Virgin Children's Pensions - It is never too early to start saving for their future

How it works

The Virgin Pension works by locking your child’s savings initially into the long-term growth of the whole stock market, using an investment approach called ‘index tracking’.

Index tracking was pioneered by Virgin and has proved so successful it is now employed by the majority of UK pension funds.

But growing your child’s pension ‘pot’ is only the first part. Having grown the fund, it is important to protect it as they near retirement.

That is why the Virgin Pension has two key stages:

• Pension Growth Fund
• Pension Income Protector Fund

How it works

Step 1 - Pensions Growth Fund

The money you save in a Virgin Pension is first invested in our Pension Growth Fund. We use the fund to buy shares in over 600 leading companies* on the London Stock Exchange, listed on the FTSE All-Share Index.

When companies are profitable their share prices tend to rise, so the value of your investment goes up. Index tracking means we automatically ‘keep track’ of the market, so when the market is growing, so is your child’s fund. Plus regular dividend payments from the companies whose shares we invest in also help to build your child’s pension pot.

Although shares do go up and down on a daily basis, it is the general upward trend of share prices over the years which has made the stock market the number one place for investors.

*The money you save in your child’s pension fund is invested across a wide range of blue chip businesses and fast-growing smaller firms with greater opportunities for growth. As well as overseas markets too, because many of these companies are international.

Remember
The value of the units which make up your child's fund can go down as well as up, so the value of your child's pension is not guaranteed.

How it works

Step 2 - Pension Income Protector Fund

Having saved hard, the last thing you want is for your child’s pension to be hit by a fall in share prices just before they retire. This is where the Virgin Pension really comes into its own.

As your child nears retirement we gradually move their savings from our Pension Growth Fund into our Pension Income Protector Fund.

This fund invests in UK government bonds (known as ‘gilts’) and a range of highly rated corporate bonds of leading UK and European companies.

Because bonds and gilts are low-risk investments, your child’s savings are less exposed to any potential last minute fall in share prices.

Also, when your child retires, they will use their pension savings to buy an annuity – these are linked to interest rates. Falling interest rates just before they retire would mean less income in retirement. But because bond prices tend to rise when interest rates fall, the Virgin Pension compensates for this.

The upshot is, the Virgin Pension is designed to try and help maximise the income your child receives when they retire.