As a parent, you're always looking for ways to secure your child's future. One avenue you might not have considered yet is starting a pension for them. While it may seem like a long way off, beginning a pension early can set your child up for a secure financial future.

Starting a pension for your child is surprisingly straightforward. In the UK, these are known as Junior Self-Invested Personal Pensions (Junior SIPPs). A Junior SIPP is a long-term savings plan that allows you to contribute towards your child's retirement. What's more, these contributions are automatically topped up by 20% by the government in tax relief, up to a maximum of £2,880 per year.

To set up a Junior SIPP, you'll need to choose a pension provider, which could be a bank, investment firm or insurance company. You can then open the account in your child's name, but as the legal guardian, you'll manage the account until your child turns 18.

After setting up the Junior SIPP, you can start contributing regularly or making lump sum contributions. It’s wise to diversify the investments within the pension for a balanced portfolio. Remember, the aim is to grow this pension pot over a significant period – we're talking decades here.

As your child grows up, you can also teach them about the importance of saving for retirement, providing valuable financial education that will stand them in good stead for the future.

Starting a pension for your child might seem like a step too far into the future, but it's a prudent financial decision. It could be a step towards a secure retirement for your child, and could even turn them into a millionaire by the time they retire! For more information on setting up a Junior SIPP, reach out to Business Class Consultancy today.