Planning for School Can Be an Education; FINANCIAL MAIL

Article excerpt


PARENTS planning private education for their children face bills that can outstrip mortgages.

Boarding fees for many public schools exceed [pounds sterling]15,000 a year and independent day schools cost about [pounds sterling]6,000 a year. Bearing in mind that private education can start when children are aged four, forward planning is essential.

Louise Challis, partner at specialist adviser SFIA Mason & Mason, in High Wycombe, Buckinghamshire, says: 'Taking a child through from four years old to the end of the sixth form is likely to cost [pounds sterling]200,000, which is more than many people spend on their homes.

'It's hard to face, but the basic message is to plan early and start thinking about school fees as soon as the child is born, if not before.' Some financial advisers specialise in school fees planning, but none claims to offer magical solutions. The best plan is to save early and regularly.

The specialists' computer systems have software for compiling savings formulae and the latest information on schools.

But the packages they recommend generally have only standard savings and investment products arranged in a way that suits clients' attitude to risk, their tax situations, and the time left before education starts.

Those who prefer to use a general financial adviser will not necessarily receive a lower standard of advice, but they should check that the adviser deals with school plans regularly, perhaps half-a-dozen cases a month.

Since the introduction of rule changes in 1996, it is no longer possible to take out special school fees planning products with tax breaks.

But there are other tailored schemes.

When parents insist on schemes with the lowest possible risk, specialist advisers sometimes recommend annuity-based plans offered by Royal & SunAlliance International, which enjoys slight tax advantages by being based offshore.

But because annuity rates are poor, the returns are often considered inad-equate to produce enough for school fees, so many advisers will not recommend them. …