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What is a Junior SIPP hero

What is a
Junior SIPP?

Important information - A Junior SIPP is a type of pension for people happy to make their own investment decisions. Investments go down in value as well as up so your child could get back less than is invested. The rules mentioned are those currently applying and could change in the future. The money can normally only be accessed from age 55 (57 from 2028). Tax reliefs depend on your child's circumstances. If you are unsure an investment is right for you or your child, please seek advice.

A Junior SIPP (Self-Invested Personal Pension) is a type of pension for a child. There are other types of children’s pensions available, such as stakeholder pensions.

  • A Junior SIPP is the same as a regular SIPP – the difference is that a parent or legal guardian manages the account, and makes any investment decisions, until the child turns 18.
  • The money in a SIPP cannot be accessed until age 55 (rising to 57 in 2028 and likely to rise further). This means a Junior SIPP has decades to mature.
  • With such a long-term investment horizon, it’s possible to follow an adventurous strategy that will hopefully bring greater rewards. This is not guaranteed as the value of investments can go down as well as up so your child could get back less than is invested.
  • Tax benefits include tax relief on money going in, possible inheritance tax exemptions for those who make contributions and tax-free growth, although the value of these benefits will depend on individual circumstances.

Could you build a £500,000 pension pot for your child?

With a Junior SIPP or any sort of child’s pension, you must be able to afford to give the money and lock it away. If you start early enough, paying in just £300 (gross) a month could build a pension pot worth more than £500,000 for a child or grandchild – see the chart below. Even saving smaller amounts can still help to generate a considerable sum (regular savings start from just £25 gross a month in our Junior SIPP). Before opening an account please view our charges.

When paying into a pension, starting early makes a dramatic difference, as the three examples below illustrate. If delayed, you could spend more than twice as much and your child could end up with just over half than if you started at birth. These are just illustrations – the actual amount your child gets could be more or less than this. The figures below show the values in monetary terms without considering inflation, which reduces the spending power of money over time.

This amount per month includes tax relief of 20%.

Length of saving Net cost Pension size (age 65)
From age 0-18 £8,640 £96,873
From age 25-65 £19,200 £57,612
Length of saving Net cost Pension size (age 65)
From age 0-18 £25,920 £290,620
From age 25-65 £57,600 £172,837
Length of saving Net cost Pension size (age 65)
From age 0-18 £51,840 £581,240
From age 25-65 £115,200 £345,675

The figures above assume basic-rate (20%) tax relief on contributions, investment growth of 5% and charges of 1%. The figures quoted represent the expected nominal value of the pension fund at retirement without considering the effects of inflation and the resulting reduction in purchasing power of your money. The value of investments will fall as well as rise over the period. Remember tax rules can change and any relief depends on personal circumstances.

Open a Junior SIPP

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Help and support

If you have any questions about the HL Junior SIPP, you can speak to one of our UK-based client support experts.

Call us on 0117 980 9926

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