A YouTube video by Ndubuisi 'Andy' Egwim explaining how a Junior SIPP (pension for children) obtains tax relief from HMRC even if the child has no earnings. He states the annual allowance for such contributions is £3,600 (gross) — meaning a net parental/top-up contribution of £2,880 is topped up by HMRC at 20% to reach £3,600. He gives an example of contributing £240/month (£2,880/year) from birth until age 18 and argues that, with long-term investment growth (he cites an illustrative 8% average), this could grow to about £1.8 million by age 55. He also says smaller amounts (e.g., £20/month) can be used and names the 'GeniusIP' platform as one place to open the account.
Questions this video answers
£3,600 (gross)
£2,880 (parent pays), with HMRC topping up 20% to gross £3,600
£240 per month (≈£2,880 per year)
8% average annual growth (speaker calls this 'reasonable')
About £1.8 million by age 55 (from £240/month for 18 years, assuming 8% growth thereafter as implied)
Chapters
But what I wanted to point out is that while your pension as someone working is tax relief, if your child who is not working, even if they're a brand new baby born today, or you are a homemaker, maybe you work at home, you look after the home, you're not doing like a salary job. HMRC also gives you tax relief if you put money into pension. I'm like, how are you going to give me back tax on tax I didn't pay? Go and check it. The maximum you can put in anyway is 3,600. And that's not your 3,600. You put 2,880. HMRC will top it up with 20%. To get it up to 3,600. They are giving you tax relief on your pension that you have not paid. So what that means is that if you have a brand new baby like the one I'm hearing now and you are putting £240 every month, by every 12 months, you would have put the maximum £2,880, the maximum. And HMRS now grosses up, they'll add 20% tax relief to give your baby back the tax they've paid or not paid. That can be for a baby. And if you do that from when your baby is born till when they're 18 years old, adjusted for inflation. Okay, there's no inflation adjustment here. But Even with an 8% tax growth, sorry, 8% investment growth and 8% is reasonable. Last year we're compounding at 87%. In my investment in stock market last year, S&P 500, which is just the top 500 companies in the US were compounding at 25%. Some years they might compound at 2%. But the average over 20, 30, 40 years has been between 8 and 10%. If you can do that for your child and think long term, how nice will it be for your child to just have 1.8 million pounds by 55 just because you are putting 240 pounds aside for 18 years and someone said why am I putting money for a 55 year old man? How far away are you from 55? What if your parents did it for you and it's not going to stop you from paying school fees. Remember, you can do it till they are 18 and even if you can't put 240, you can put £20. So just learning these things and taking advantage of them. The account you can use to do that is called the GeniusIP. And there are many platforms that provide it. GeniusIP, write it down and look it up, okay?
