While a pension fund for children may be a suitable and tax efficient financial vehicle for some investors, it should only really be considered by “top-end clients”, experts have said.

Child trust fund provider Family Investments said opening a pension for a child can be a tax-efficient way of passing on valuable assets for the “sophisticated” investor, but these types of investments will not help a child with more immediate concerns going into adulthood, such as university fees.

Family Investments marketing director Miles Bingham said for most investors a Child Trust Fund (CTF) would be more valuable.

All children born on or after September 1st 2002 receive a £250 voucher to start their CTF, after which a maximum of £1,200 each year can be saved in the account by parents, family or friends.

Money cannot be taken out of the CTF once it has been put in until the child is 18 when they gain access to it.

Mr Bingham points out that with a child pension children would not be able to access the funds until they were 50.

“With a child you are thinking about university fees and trying to get the kid on the housing ladder; not about [them] aged 50! [A pension] is something the top-end clients might do, but it’s not really something for the average person on the street,” Mr Bingham said.

The most recent government figures show that, of vouchers issued in June 2006, only 73.4 per cent of parents opened a CTF for their child before the voucher’s 12 month expiry point.

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