Mind the 15-year junior pension gap

Aberdeen recommends government raise Junior SIPP allowance to level up with Junior ISAs – and put pensions on the curriculum.

• With inflation taken into account, the annual Junior SIPP allowance is worth 49% less than it was when it was launched in November 2011

• Pensions education: Aberdeen research shows stark differences in pension pots between low and high financial literacy levels – with a £45,000 gap in median average pots

As the UK  grapples with the retirement savings challenge, and young people stare into a cost of living and employment crisis, Aberdeen Adviser recommends the government close the gap between the Junior SIPP and the Junior ISA annual allowance, by raising the Junior SIPP allowance.

Aberdeen Adviser is one of the largest adviser platforms, with assets under administration of £80.4 billion.

To bring the Junior SIPP allowance to £9,000, in line with Junior ISAs, would require the contribution to annual SIPP allowance to be £7,200 net (with £1,800 tax relief at source).

While no panacea for the growing headwinds young people face, Aberdeen Adviser believes that levelling the annual Junior SIPP and ISA allowances would serve to highlight the importance of pensions, and help families set up their loved ones for a lifetime of pensions saving. 

The Junior SIPP and Junior ISA were launched in 2011 – but while each started life  with a £3,600 annual allowance (including tax relief for Junior SIPPs), the Junior ISA allowance has since almost trebled (although has still not kept up with inflation). 

Running alongside this, Aberdeen Group is suggesting that the Government specifically include pensions and long-term savings in the national curriculum from 2028. Some good work is already being done in Scotland with regard to Application of Maths, however it would make sense to have a consistent education approach across all the home nations. Currently, mortgages, budgeting and compound interest are set to be included as part of a shake up of compulsory Citizenship studies. Aberdeen Group has made representations in its response to the Treasury Select Committee call for evidence on the Financial Inclusion Strategy.

Aberdeen research, published today, reveals a stark difference in pension pots between those with ‘very good’ financial literacy and those with ‘very poor’ financial literacy: a median average pension pot of £62,500 (very high financial literacy) versus £17,500 (very low financial literacy). While there will be a range of factors at play, these numbers are thought provoking. (Source: Opinium Research*, see table in notes to editors).

Noel Butwell, CEO, Aberdeen Adviser, says: “The Junior SIPP should be the ultimate foundation for giving young people financial security in later life. We would like to see a product neutral approach which recognises the importance of each for long-term planning. 

“The Junior SIPP provides a fantastic platform for families, and their children, to build on. It creates a foundation that young people can add to throughout their working lives, building financial security and addressing the uncertainty of future state provision.

“Of course, many people may struggle to pay into their own pension, let alone their loved ones’ - something that is also the case with Junior ISAs. To make real inroads for all, we also need to get pensions and long term savings on the national curriculum, across all home nations.  Knowledge is power and this would be an emblematic shift in a world where people will increasingly have to look after their own financial future.”

The numbers

The annual Junior ISA allowance has risen to £9,000 since launch, although it  would be £13,500 if it had kept up with inflation. 

The Junior SIPP allowance, meanwhile, has stayed the same – and with inflation taken into account, the annual Junior SIPP allowance is worth 49% less than it was when it was launched in November 2011.

Currently if the full £3,600 allowance is paid in for 18 years without further contributions and earns a return of 5% a year over 50 years it results in a £1.2m pension pot. But taking inflation into account, (assumed at 2.5% per year), that would be worth the equivalent of £280,000-300,000 in today’s money. A great retirement head start – but one that growing numbers of the UK public are going to need.

Verona Kenny, Chief Distribution Officer, Aberdeen Adviser, says: “When it comes to pensions, there’s no such thing as too early. People bemoan the UK’s state pension, but to match it in full you would need  to buy an annuity worth roughly £230,000-£300,000, depending on your age, health, and annuity rates.  That takes a lot of saving and discipline .

“The Junior ISA and Junior SIPP are great tools for people to start planning for their loved ones’ futures and help set them on the right path. It’s also a way for people to pass on their wealth for the next generation in a structured way. But the gap in allowances isn’t helpful and doesn’t take into account the impact of inflation over a lifetime especially when it comes to pensions. By levelling the allowances for both the Junior ISA and Junior SIPPs to £9,000 (including tax relief for SIPPs), it would bring simplicity and flexibility.”

Kristina Church, Group Head of Sustainability, Aberdeen Group, says: “A huge expansion of financial education is taking place in many schools across the UK from 2028, which will hopefully support future generations start to build more financial resilience. It’s exciting, and positive - but it is still missing a key piece of the jigsaw: pensions and long-term savings.

“Teaching pensions and long-term savings in schools, and making it a vital part of the junior savings market, could be a really powerful rallying call. It’s also a great way to bridge the gap between financial education and employment to help the next generation apply their pension knowledge and build financial freedom through their working lives.”

Ends

Pension pots and savings broken down by financial literacy level

Aberdeen used the ‘big three’ financial literacy questions, developed by, and with kind permission of, the Global Financial Literacy Excellence Centre. Sample size: 3,000 UK adults, nationally representative, between November 10-20 2025. Source: Opinium Research.

Media enquiries 

Jemma Jackson

Head of Media Relations and Campaigns, Aberdeen

jemma.jackson@aberdeenplc.com

07776 204 610

Rachel Cashmore 

Senior Manager, Media Relations: Adviser and Investments

Rachel.Cashmore@aberdeenplc.com 

0734 170 3358

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