junior pension

Junior Pension: Is it Time to Think About Their Futures?



Posted on: 29th October 2020

Parents of newborn to young children can open a junior pension with upto £3k paid in each year, so is it never too early to start?

Parents are now open to the prospect of opening a pension for children under the age of 18 to better secure their future prospects for retirement, although children aged 16 or over are required to sign the application form.

Once the child turns the age of 18, control of the pension is automatically passed to the child and they have full say in determining where the money is held and invested.


With up to £2,880 payable into the pension each year, children can benefit from a tax relief similar to adults.

Contributions are automatically increased by the 25% government bonus which takes the maximum to a total of £3,600. The longer the money stays invested equates to a longer period for it to grow, where payment of simply £10 per month from newborn until the age of 18 results in a sum of £20k by the age of 65.

For those installing a one-off payment at the birth of £2,880 can see a total figure of £117k by the same age. This is assuming growth of 5.5% a year after fees.

Potential Downside

A junior pension does have its potential downsides in that the money cannot be accessed until the child is in their later years with a sign of the rising of that age under future legislation setting the goalposts back even further.

This labels the junior pension more a long term savings product instead which many parents would rather put money into a savings account that can be accessed from teenage years.


Regardless of the downside, parents who look to gain subsequent savings in an account for their child should turn to a pension as the most viable option.

With the tax paid on the money added to the investment allowing it to grow from the start, parents with decent amounts of cash to invest for their children and grandchildren can give them a combination of pension and junior Isa money which covers all bases.

The overall lesson that comes from whichever route is taught to the children in how to manage and invest money throughout their lifetime.


Children’s pensions are most likely held through junior Sipps which, like the adult equivalent, gives full control over the management of the money and its investment. Inclusive of the investments inside the Sipp are unit trusts and open-ended funds, ETFs, Investment trusts Government and corporate bonds, trusts, cash and commercial property.

When choosing a Sipp for your child, keeping costs and charges low is paramount to finding the best deal in the market. For those looking to secure a long term financial future for your child of any age, contact the team at Haven IFA for advice from the best independent financial advisors UK.