The idea of setting up a pension for a preschooler might sound absurd, but it's the latest trend among anxious middle-class parents, according to reports. A Junior Sipp, or self-invested personal pension, is being promoted as a way to harness compound interest and turn your child into an 'alpha pension millionaire' by retirement age.
The Financial Reality Check
However, this advice comes at a time when millions of adults are struggling to save for their own retirement. The Pensions Commission recently warned that at least 15 million people in the UK are not saving enough for their later years. Meanwhile, the cost of raising a child to 18 has soared to £260,000, or £290,000 for lone parents, according to the Child Poverty Action Group. For many families, adding a pension to that list of expenses seems unrealistic.
A Vote of Confidence in the Future?
Investing in a child's pension also requires a leap of faith in the global economy and geopolitics, which are currently in a dire state. It's a big ask for parents who are already worried about their own financial security.
Letting Ourselves Off the Hook
Perhaps it's time to view this trend with a dose of humor. Imagine a toddler searching for reading glasses to check their portfolio in the Financial Times, accompanied by a flaxseed breakfast and child-sized statins. The image is both ridiculous and endearing. If children are to have pensions, they might as well also get National Trust memberships, good secateurs, and season tickets to Wigmore Hall—along with the accompanying dodgy knees and midlife crises.
Ultimately, while the concept is amusing, it's probably best for most parents to focus on the present and let go of this particular source of guilt.
