Is a Junior SIPP actually worth it?

I have a Junior SIPP for each of my two children. Money is paid in around four times a year, mostly by their grandparents. There isn’t a huge amount in them currently but we think it’s a great way to get them ahead on their pension. Starting a pension for your child can take the pressure off them into adulthood while they have other costs and financial goals to navigate. An initial payment of £800 shortly after birth (£1,000 after tax relief) would be worth almost £2,500 at age 18 if it grew by 5% a year. Contributions of £42 a month (£50 with tax relief) would be worth £17,551 after 18 years on returns of 5% a year. When saving for your child, it’s more common to consider a Junior ISA or your own savings account before thinking about a pension for your child. But the benefit of a Junior SIPP is that money saved into the account gets a 20% boost thanks to tax relief. It can grow tax-free until the money is withdrawn. When withdrawn, the first 25% is tax-free, after which only income tax may apply. escalator_warningInterested in learning more about ISAs? Find out what ISAs are by reading my complete guide to ISAs in the UK . Learn how to open a stocks and shares ISA or figure out the best provider for you when ready to open an account. Like with an adult pension, money can’t be withdrawn from a Junior SIPP until the child is in their mid-to-late 50s. A Junior SIPP is therefore designed for retirement and can’t be used for a child’s education or as a house deposit.

What is the youngest age to apply for a SIPP?

You can open a Junior SIPP shortly after your child has been born. There is no minimum age to open a Junior SIPP. However, the account has to be opened by a parent or guardian. The child must be under the age of 18 and the account held in the child’s name, but the account is still managed by the parent or guardian. Once the child turns 18, they get control over the account and how the money is invested. Like with a standard SIPP, they can’t withdraw money from the account until they reach the minimum age of 55 (rising to 57 in 2028) so it is certainly a long-term savings account.

Do Junior SIPPs get tax relief?

Yes, contributions into a Junior SIPP benefit from tax relief and this is one of the main advantages of a Junior SIPP. When you pay money into the SIPP, 20% tax relief applies. For example, if you pay in £100, a total of £125 goes into the account. Contributions are usually paid net of tax. So if you pay in £100, the Junior SIPP provider will then reclaim the 20% tax relief (£25) from HMRC and this will be paid into your account once received from HMRC, which can take a few weeks.

What is the difference between a SIPP and a Junior SIPP?

A SIPP is for U.K. adults aged 18 plus, while a Junior SIPP is for those under the age of 18. You can pay much more into an adult SIPP while benefiting from tax relief – up to £60,000 a year, compared with up to £3,600 a year for a Junior SIPP. escalator_warningLooking for a SIPP for an adult? If you'd like to find the best overall SIPP provider for an adult, check out my guide to the best SIPP providers in the UK . If you'd like to learn more about the nuts and bolts of SIPPs in general, visit my complete guide to SIPPs in the UK .

Can grandparents pay into a Junior SIPP?

Yes, grandparents can pay into a Junior SIPP. One option is to pay money to the child’s parent to pay into the account on your behalf. Alternatively, you can usually make a payment directly if you have the account details. Just be aware of the annual Junior SIPP contribution limits. Note that anyone can pay into a Junior SIPP, you don’t have to be family. Friends, godparents, or anyone else who cares to can contribute.

How many Junior SIPPs can I have?

You can have multiple Junior SIPPs but there are only a few providers of Junior SIPPs in the UK so there isn’t a lot of choice. There also isn’t much benefit to opening multiple Junior SIPPs with different providers as they all offer similar investments. If you are unhappy with your current Junior SIPP provider, you can transfer to a new one. Go to your new provider's website to start the transfer process by filling in an application form. The transfer process typically takes 2 to 4 weeks.

How much can I contribute to a Junior SIPP?

The amount you can pay into each Junior SIPP is £2,880 a year – which increases to £3,600 after 20% tax relief is applied. This works out to £240 a month if spread across a year.

Best Junior SIPP Providers in the UK

Written by Elizabeth Anderson
Fact-checked by Joey Shadeck, Steven Hatzakis
Edited by Jeff Anberg

September 12, 2024

people Why you can trust UK.StockBrokers.com

We've been reviewing financial products and services and writing about U.K. markets since 2016. Blain Reinkensmeyer, Elizabeth Anderson and Steven Hatzakis have each placed thousands of trades, including shares, options, futures, cryptos, and forex. Find out more about us and how we test.

A Junior SIPP (Self-Invested Personal Pension) is designed to give your child a head start with their retirement savings, beginning as early as their birth. By setting up a Junior SIPP, you can take advantage of the power of long-term investing, potentially growing a significant pension pot for your child by the time they reach retirement age.

With only four Junior SIPP providers among the 22 major UK investment platforms we tested, the options are limited. In this guide, I’ll walk you through the best Junior SIPPs available, outlining the pros and cons of each provider, and offering a clear rundown of the essential facts to help you determine if a Junior SIPP is the right choice for your child and your financial strategy.