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Parents explain why they are setting up pensions for their toddlers and babies
Überblick
Some parents in the UK are setting up private pensions, known as Junior SIPPs, for their young children, contributing modest monthly amounts that can benefit from decades of compound growth. While the funds cannot be accessed until the children reach the age of 57, providers report a significant rise in the popularity of these accounts. Parents acknowledge that making these contributions requires financial sacrifices, such as eating out less and cutting back on birthdays and Christmas, but believe it provides a vital long-term financial head start.
Wichtige Punkte
- Richard and Caitlin Brain from Swansea pay £50 a month into a pension for each of their two young children, alongside Junior ISA savings.
- UK Junior SIPPs allow a maximum contribution of £2,880 per year, which is topped up with £720 in government tax relief.
- Providers like Hargreaves Lansdown and Fidelity have reported substantial increases in the number of Junior SIPP accounts opened.
- Fidelity estimates that paying £50 a month from birth could result in a pot of around £135,000 by the time the child reaches retirement age.
- Similar long-term savings schemes exist internationally, such as Trump Accounts launched in the US allowing contributions for children.