September often feels like a fresh start. New school shoes, new timetables and, for many families, a return to familiar routines.
But as children head back to the classroom, it can also be a useful time to think a little further ahead. Beyond the next school year, what could you put in place today to help give a child or grandchild greater financial confidence in the years to come?
Two options worth understanding are the Junior ISA and a pension for a child. They are designed for very different stages of life, but both can provide a tax-efficient way to invest for the next generation.
Junior ISAs - investing for their early adulthood
A Junior ISA, often called a JISA, is a tax-efficient savings or investment account for children under 18.
For the 2026/27 tax year, up to £9,000 can be paid into a Junior ISA. While the account belongs to the child, parents, grandparents and other family members can contribute.
There are two main types: a Cash Junior ISA, which works much like a savings account, and a Stocks and Shares Junior ISA, where the money is invested and therefore has the potential to grow over the longer term, although its value can rise and fall.
Any interest, income or capital gains generated within the Junior ISA are free from UK Income Tax and Capital Gains Tax.
The important point to remember is that the money belongs to the child. They can take control of the account from age 16, although they cannot withdraw the funds until they turn 18. At that point, the Junior ISA becomes an adult ISA and they can access the money.
That could make a Junior ISA useful for future goals such as university costs, a first car, a deposit towards a first home, or simply giving them a financial head start as they enter adulthood.
A pension for a child - thinking much further ahead
Retirement might seem an exceptionally long way off when a child is heading back to school, but that long timeframe is precisely what can make starting a pension early so powerful.
A pension can be opened for a child and contributions can be made on their behalf. For a child with no earnings, up to £2,880 net can normally be contributed each tax year. Basic-rate tax relief is then added by the Government, taking the total gross contribution to £3,600.
In simple terms, a £2,880 contribution can become £3,600 in the child’s pension before considering any investment growth.
Unlike a Junior ISA, however, this money is designed specifically for later life and will normally be inaccessible until the child reaches the relevant minimum pension age.
That lack of immediate access can be an advantage when the objective is genuinely long-term. Money invested when a child is young has decades in which to potentially benefit from compound growth.
Junior ISA or pension - which should you choose?
They do not necessarily have to be an either/or decision.
A Junior ISA is generally focused on giving a child financial resources as they enter adulthood. A pension is designed to support them much later in life.
For some families, using a combination of the two can help provide support at different stages. The right approach will depend on your circumstances, how much you would like to contribute, when you would like the child to have access to the money, and the level of investment risk you are comfortable taking.
And you do not necessarily need to contribute the maximum allowance for saving to be worthwhile. Regular, manageable contributions made over many years can build into something meaningful.
Small steps today can make a meaningful difference
When thinking about a child’s future, it is natural to focus on their education, experiences and opportunities. Financial planning can be another part of that preparation.
Starting early gives money something particularly valuable – time.
Whether you are a parent looking to establish a regular savings habit or a grandparent considering how you could pass wealth to the next generation, Junior ISAs and pensions are two options that may be worth exploring as part of your wider financial plan.
At Fogwill & Jones, we can help you understand the options available and how saving for children or grandchildren can fit alongside your own financial priorities.
If you would like to explore how you could start investing for the next generation, please get in touch with our team.
The value of investments can fall as well as rise, and you may get back less than you invest. Tax treatment depends on individual circumstances and may be subject to change. Pension and ISA rules and allowances may also change in the future.