News & Views

Is a Junior Pension an investment option for a child or grandchild?

14th August 2023

This week we look at the option of investing in a Junior SIPP for a grandchild. This is a long term investment as the person won’t be able to access the funds until they approach their retirement.



Although the thought of a Junior Pension or Junior SIPP might sound a bit odd, but it does make perfect financial sense.

As a grandparent, you can appreciate the importance of retirement planning, and it is never too early to start planning for your pension.

So, it is possible to plan a Self-Invested Personal Pension (SIPP) for a newborn with a tax top-up too.

For every £1 you invest into your grandchild’s SIPP, the government will add another £0.25p.

You can therefore add up to £2,880 every year to your grandchild’s pot and will be boosted by a tax relief of £720 giving it a total of £3,600.

A Junior SIPP is about long-term planning. Although the Junior SIPP will be transferred at the age of 18 to the grandchild, the pension money is locked away until the age of 55 (57 from 2028) and possibly even later in the future.


Here’s an illustration of what that could mean:

If the junior pension had a maximum of £3,600 invested per year from the child’s birth until the age of 18, then the total invested would be £64,800 but the returns would be £91,800 assuming an investment return of 4.5% and investment administration charge of 0.75%. Without adding any more to the SIPP, then that amount by the time person reaches 60 would be worth £425,000 using the same investment rate and charges.

This is obviously a very different saving vehicle compared to a Junior ISA where the child can access the money when they are 18 compared to only being able to access when they are approaching retirement. A Junior Pension is not going to be of financial help when they are growing up and needing help with a house purchase or raising a family, but it will be of great help when they retire. As a grandparent, you might not see the benefit of that investment, but you know you will have contributed to your grandchild’s later years.

Next week we’ll look at a Premium Bonds as part of our series looking at how parents, guardians and grandparents can help invest in a child’s future. There are links to the articles already published below.

1.            Children’s Savings Accounts

2.            Junior ISAs

3.            Junior Pension

4.            Premium Bonds

5.            Bare Trusts

And if you want to discuss any on the above, you can schedule an appointment with us here>>

* The value of an investment may go down as well as up, and you may get back less than you originally invested.