Welcoming a child into the world is a moment of joy — and a major responsibility. Beyond love, warmth and care, there’s another gift you can consider giving: a HeadStart on long-term financial security.
Yes, we’re talking about a pension. And yes — it can start from birth.
Why would a baby need a pension?
It might seem premature when retirement is 60 years away, but starting early unlocks a powerful advantage: time.
Imagine the difference an extra two decades of compound growth could make to your own pension pot. Now apply that to your child. With consistent contributions and long-term investing, you could set them up for a retirement free from financial worry — at a far lower lifetime cost.
For example, £80 a month contributed over 60 years could grow to nearly £360,000 at 5% annual compound growth — all from just £57,600 in contributions, with tax relief boosting that to £72,000 (based on current rules for higher-rate taxpayers).
The taxman lends a hand
Even though your child isn’t earning, you can contribute up to £2,880 per year into their pension — and with basic rate tax relief, HMRC tops it up to £3,600. This makes a junior pension one of the most tax-efficient savings vehicles available.
When your child turns 18, they become the legal owner of the pension. They still won’t be able to access the funds until at least age 55 (rising to 57 in 2028), but they can choose to continue contributing or simply let the investments grow.
SIPP or Stakeholder Pension?
When setting up a pension for your child, you have options. A stakeholder pension is simple and low-cost, with investment decisions managed by the provider — making it a straightforward way to start saving.
A Self-Invested Personal Pension (SIPP) offers more flexibility, with access to a broad range of investments. But this flexibility can be a double-edged sword. Choosing and managing investments within a SIPP requires expertise, time, and ongoing oversight — which is why we believe this kind of pension is best used with professional guidance.
With expert support, a SIPP can be an effective, long-term option — allowing you to build a retirement fund that benefits from decades of careful management and compound growth, without needing to make investment decisions yourself.
Start with the future in mind
Buying a teddy bear is a lovely gesture. But a pension could be a life-changing gift. By starting early, you give your child the benefit of time — and the opportunity for a secure financial future.
At Continuum, we can help you choose the most suitable pension option and manage it on your behalf, so you have peace of mind that your child's financial future is in safe hands.
Speak to us today to find out how we can help you give your child a head start that really lasts.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to any retirement strategy you should seek independent financial advice before embarking on any course of action.
A pension is a long-term investment; the fund value can go down as well as up and this can impact the level of pension benefits available.
Levels and basis of reliefs from taxation are subject to change and their value depends upon your personal circumstances. We recommend that the investor seeks professional advice on personal taxation matters.
The value of an investment can go down as well as up and you may get back less than you invested. When investing Capital is at risk.
The Financial Conduct Authority does not regulate taxation advice.
