A Junior Self-Invested Personal Pension (SIPP) opened for a child at birth could turn modest monthly contributions into a substantial retirement fund. Paying £50 a month from birth could build a pot worth around £368,000 by the time the child turns 65, according to figures cited in the article.
Parents, legal guardians, or relatives can open a Junior SIPP for a child until they turn 18. The total annual limit for contributions is £3,600, made up of £2,880 from an individual and £720 from the government through tax relief. As with adult pensions, the child cannot access the funds until later life – currently from age 55, rising to 57 from April 2028.
Maximum contributions and potential growth
If the maximum amount were paid into the pot from birth until the child's 18th birthday, total contributions would reach £51,840, with tax relief taking the figure to £64,800. Assuming the pot grows at 6% a year after charges, it could be worth £1.77 million when the child hits 65. Allowing for inflation of 2% a year, that equates to around £488,000 in today's money.
The number of parents opening Junior SIPPs at the start of the 2026 tax year was 158% higher than in 2025, according to the article. This surge comes as families face the cost of living crisis, yet some see the long-term benefits of early saving.
Real-life example: Molly Haylett
Molly Haylett, 30, of Essex, is a financial adviser and mother of two daughters aged two and five. She started paying into a pension for each of her children as soon as they were born and also saves into Junior ISAs. Her youngest has a pension pot worth £3,000, while her eldest has £12,000 stashed away.
Haylett said: "I wanted them to have options. You give your kids money all the time through presents, so having pots that aren't for today is really important." She added: "It's a gift that I might not see them use, but I am very confident it's going to make a huge impact on them."
She has adjusted her contributions over the years, starting with about £20 a month, increasing to £60, and now paying around £200 a month. "I did it based on what I could afford at any given time," she said. "Even if you did £20, small steps make such a big difference because it's invested - there's growth and compound interest over time."
Considerations and alternatives
Junior SIPPs are popular with some parents because they know their child will be older and wiser when they receive a large sum of cash. However, the money cannot be used for other life milestones such as a first home, driving lessons, or university fees.
Sarah Coles, Head of Personal Finance at AJ Bell, said this is why some parents choose to have multiple ways of saving for their children. She said: "Life is increasingly expensive for this generation, so there will be times throughout their lives that support from family can be a lifeline."
Junior ISA savings can be accessed when the child turns 18, with an annual allowance of up to £9,000 that does not affect the parent's own ISA allowance. Research from Octopus Money shows only 22% feel comfortable giving their children access to long-term savings at 18, with 51% preferring to delay access, and 25 being the most popular age.
Research from Hargreaves Lansdown suggests some families may be using Junior SIPPs to cut their Inheritance Tax bill by making the most of gifting allowances. From April, most unused pension funds and death benefits will be included in the value of a deceased person's estate for Inheritance Tax purposes. Under current rules, if you die before age 75, the person inheriting your pension does not pay tax on retirement savings; if you die after 75, they pay Income Tax when drawing from it.
For Haylett, investing in pensions is about peace of mind. She said: "Think about to age 18 when you want them to have the money, because pensions have got a lock on the door. If they do make bad decisions, which I hope they don't, they've still got money there that I've given them when they're going to be much wiser and older."
