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Home Finance Junior SIPPs: Making child’s play of retirement planning

Junior SIPPs: Making child’s play of retirement planning

by Jessica Weisman-Pitts
iStock 622064048
  • You can pay into a Junior SIPP (JSIPP) for a younger member of the family from birth until the age of 18. At 18 it becomes a SIPP and the young person can take control of making contributions for their retirement.
  • You can put in up to £2,880 per year into a JSIPP. The tax relief received will gross the contribution up to £3,600. You can make smaller or more ad-hoc contributions too.
  • Starting someone’s pension journey early means they have even longer to benefit from compound returns.
  • HL data shows someone contributing £300 per month to a SIPP from birth to 18 would have amassed £100,425.95. If no further contributions were made the SIPP would still benefit from investment returns and could be worth as much as £861,835.53 at age 65.
  • Someone contributing £100 per month would have accrued a pension pot of £33,475.32 for a young person by the time they hit 18. Again, if they didn’t make any further contributions the pot could be worth £280,530.15 at age 65.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“Babies and small children are deluged with gifts – fluffy animals and squeaky plastic toys that are quickly broken or abandoned in favour of playing with the box they came in. A Junior SIPP (JSIPP) may not feel quite as exciting as the latest must-have toy but in terms of a gift with lasting impact you can’t get much better.

There is no better way of seeing the power of pensions than looking at what a JSIPP can deliver over time. If you pay in the full £3,600 per year, then your child hits age 18 over £100,000 ahead of their peers who won’t be auto-enrolled for at least another four years. This sum then has almost 50 years to keep growing and even if they didn’t make a contribution themselves they could still end up with a sizeable pension.

Even if you can’t afford to contribute the whole £3,600 per year for the whole 18 years you can still give them a real head start in life. Contributing £100 per month to their JSIPP would see them accumulate over £33,000 by age 18 and this could be £280,000 by the time they come to retire – it’s a real leg up the retirement planning ladder. Even ad-hoc contributions as and when you can afford them will really build up over time.

Getting to the age of 18 and seeing what they have accumulated can be a powerful incentive for them to really engage with their own financial planning. They’ve been given such a good start they don’t need to worry about finding large contributions of their own – they are able to make smaller contributions to their pension and have more money to save for house deposits or build up savings elsewhere. It’s a gift your child will surely thank you for.”

Estimated pot value at age 18

Monthly contribution (including tax relief) Value at 18
£100 £33,475.32
£200 £66,950.64
£300 £100,425.95


Estimated pension value at age 65 if regular contributions made until age 18 and then stopped.

Monthly contribution including tax relief (until age of 18) Value at 65
£100 £280,530.15
£200 £567,739.81
£300 £861,835.53