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Intergenerational planning using Junior ISAs or Junior SIPPs

Given the ever-increasing costs in society, coupled with Silent Generation and Baby Boomers starting to think more about intergenerational planning, both Junior ISAs (JISAs) and Junior SIPPs (JSIPPs) are more frequently coming up in client conversations.

Whether a JISA, JSIPP or both are used depends primarily around the timeframe to access the money. If savings are being made to a JISA, the child gets full access to this money at age 18 and can do what they like with it. Some savers are happy with this, others feel they want more control over how the money is spent, so decide against it. For savers who opt for JISAs, it tends to be preferred where the intention is to use monies to fund university fees, help with a house deposit or a first car purchase. For those who want to take investment risk, a Junior Stocks and Shares ISA can be used. For those who don’t want investment risk, a Junior Cash ISA can be used. In either scenario, when the child turns 18, this money can be transferred into an Adult ISA, thus taking advantage of a larger annual ‘use it or lose it’ allowance (currently £20,000 pa), should this be appropriate.

The JSIPP, on the other hand, can typically only be accessed when the individual reaches age 55 (57 from 2028). As you can see, legislation changes can affect when money can be accessed. Clearly, a JSIPP is not helpful to fund shorter-term objectives. With that said, it can be very attractive as a longer-term investment because its lack of shorter-term accessibility means children have a longer investment timeframe. This helps them benefit from compound interest (subject to investment performance), even on the tax relief received. Currently, a child can receive £2,880 into their JSIPP and obtain a further £720 in tax relief added to their JSIPP. Even if the child hasn’t paid tax? Yes. Can this be done annually? Yes. Clearly, for those who can afford to contribute to a JSIPP and have a longer-term view, it has potential to be financially rewarding. This money could be used to help fund some of the child’s retirement, or allow them to focus on using their natural savings for more pressing priorities (rather than saving more into a SIPP) – it all depends on individual circumstances.

As a wider point, involving children at an early age around money can be very empowering to them. This is a fundamental life skill which is hugely overlooked across the country. In these times, we are finding providers are making their JISAs and JSIPPs digitally accessible, which helps engage the younger generation to take ownership, and often provokes deeper thoughts around money, building the right investment disciplines longer-term.

If you would like to discuss any of the above, please contact your usual Partners Wealth Management adviser, or call us on 020 7444 4030 for an initial conversation.

Andrew Mina
020 7444 4061



The contents of the article have been prepared solely for information purposes. The article contains information on financial products and services and such information is designed for and addressed solely to individuals seeking generic industry information. This document reflects our understanding of current legislation. Past performance is no guide to future returns.