They say it\u2019s never too early to start saving for a pension. Junior SIPPs take that concept very literally. They let you open and start paying into a pension scheme for your child from the day they\u2019re born. <\/p>
Inevitably, most new parents will have more immediate priorities on the day itself than setting up their bundle of joy for a dim and distant retirement date. But setting up your child for a secure financial future should be fairly high on your early-years to-do list. A junior SIPP is one of many long-term savings products worth considering.<\/p>
A junior SIPP (self-invested personal pension) is a private, defined contribution<\/a> pension scheme taken out for a child by a parent or guardian. The annual contribution limits are lower for a junior SIPP than for an adult SIPP<\/a>. But, as with adult SIPPS, tax relief is available on money paid in.<\/p> With a junior SIPP, a parent or legal guardian sets up, manages and contributes towards their child\u2019s future pension. As with regular SIPPs<\/a>, the holder decides where the money is invested and is responsible for managing the account. With a junior SIPP, the parent or legal guardian does this on behalf of their child until they turn 18.<\/p> The maximum annual deposit a parent or guardian can make is \u00a33,600 per year. This benefits from basic-rate (20%) tax relief. When the child turns 18, ownership will pass to them, and they\u2019ll take on responsibility for managing the pension.<\/p> As with any private (or workplace) pension, you or your child can\u2019t access money in a junior SIPP until the child reaches a certain age. Currently, that\u2019s 55 though the government has plans to raise the access age to 57 from April 2028.<\/p> The only age requirement to open a junior SIPP is that a child must be under 18. You can even set it up from the day your child is born, assuming you\u2019re not (understandably) preoccupied with more important matters at the time.<\/p> If a child is 16 or over, they are likely to need to give their consent and sign paperwork for a junior SIPP to be opened in their name.<\/p> Many of the most popular investment platforms and share trading accounts<\/a> (or \u201cbrokerages\u201d as they\u2019re sometimes called) offer junior SIPPs as well as adult versions, These include:<\/p> Only a parent or legal guardian can open a junior SIPP on a child\u2019s behalf. However, anyone (grandparents for example) can make payments, up to the maximum annual deposit level (\u00a33,600 as of the 2026\/2027 tax year).<\/p> A junior SIPP is arguably the epitome of advance planning. Starting contributions early gives the pension investments the maximum possible time to grow over a child\u2019s lifetime. Generally speaking, the longer you keep money invested, the greater the likely return. Thanks to the compound effect of investment growth, even relatively small contributions could build up into a pretty decent pension pot by the time a child eventually retires. This is subject to the usual caveats of investment market fluctuations<\/a> and the risk of investment value going down and up.<\/p> The other key benefit is that even though most children are unlikely to earn enough income to pay tax, deposits into a junior SIPP benefit from basic-rate (20%) tax relief. That means if you pay in the maximum personal contribution of \u00a33,600, the government will top up the account by an extra \u00a3720. That equates to a total contribution of \u00a33,600 into the junior ISA (the \u00a3720 top-up is 20% of this total).<\/p> As with any form of investing, putting money into a junior SIPP comes with the risk of investment loss<\/a>. Especially if you or your child chooses to follow a higher-risk investment strategy<\/a>. Though in principle, any short-term volatility should be mitigated over the long investment period.<\/p> Before you jump into opening a junior SIPP, bear in mind that the money you contribute will be locked away until your child turns 55. They won\u2019t be able to use it for anything before then (such as buying a property). And there\u2019s a good chance you won\u2019t be around to see them reap the benefits.<\/p> SIPPs are designed to be proactively managed by the account holder. As control of a junior SIPP passes to a child when they turn 18, you\u2019ll need to make sure they have the investment knowledge they need to take on that responsibility. Of course, there\u2019s nothing to stop you continuing to offer guidance to help them make decisions.<\/p> There are other types of children\u2019s pension available, such as stakeholder children\u2019s pensions.<\/p> Alternatively, if you\u2019re looking to save for your child\u2019s future, but would rather the money wasn\u2019t tied up until they retire, there are a few other savings vessels worth considering. These include:<\/p>How does a junior SIPP work?<\/h3>
What are the age requirements for a junior SIPP?<\/h3>
Which providers offer a junior SIPP?<\/h3>
Who can make contributions to a junior SIPP?<\/h3>
What are the benefits of a junior SIPP?<\/h3>
Are there any drawbacks to junior SIPPs?<\/h3>
What are the alternatives to a junior SIPP?<\/h3>