13/06/2026
I read this article this morning and thought I would share. We are all concerned about pensions and about what the state pension will look like when we retire. A conversation we have had with a few clients lately is investing in pensions for children……
https://news.sky.com/story/how-to-reduce-your-inheritance-tax-bill-and-set-your-child-up-for-life-13552928
Don't forget about children's pensions ……
"Although it may seem like a crazy idea to put money aside for their retirement when they are very young, helping children establish long-term savings early in life could significantly improve their future financial security and flexibility, particularly at a time when many younger people struggle to prioritise retirement planning," Leeson added.
You could do this by putting money into a Junior Self-Invested Personal Pension (Junior SIPP) - again, by doing this, you may reduce the value of your estate for inheritance tax purposes.
Junior SIPPs are tax-efficient savings accounts that can be opened for a child under 18 by a parent or legal guardian.
Other parties such as grandparents can make contributions.
When the child turns 18, they take control of the account, but they cannot access the money until they are 55 (this is rising to 57 from 2027).
One of the tax benefits for those paying into the account is that they can pass money free from inheritance tax.
You can contribute as much as £2,880 into a junior SIPP each tax year. The government then applies basic 20% pension tax relief, adding £720 if you make the full contribution.
Leeson explained:
"Assuming 5% annual growth until age 57, and no further contributions after age 18, the child could have access to a pension fund worth around £737,000.
"Better still when the child is old enough to make their own contributions to a pension, assuming a 5% personal contribution from age 30 and matching employer's contributions for someone earning £30,000 a year, the total pension at age 57 could be over £905k. Adding in the JISA/ISA investment, that's a cool £2.69 million.
"Even if you assume inflation will take 2% of the return each year, your child could still have the equivalent of more than £1 million in today’s terms, when they reach 57 years old."
Trying to cut the amount of inheritance tax our loved ones pay has long been a priority - but frozen allowances and changes coming in April 2027 mean more people are looking to keep more of their estate out of the taxman's hands.
