Virgin Money has launched a new savings scheme, which allows parents and well-wishers to contribute towards a pension fund for a child.

The company reports than one in ten pensions it arranged in the last year were for children, with around half of kids having a pension started for them being under the age of five.

A pension fund which receives a £660 gift at birth and the monthly child benefit payment of around £75 could, assuming seven per cent growth, be worth over £600,000 when the child retires, even if the child adds no extra payments later in life.

“It’s an excellent way to start building a secure financial future for your children, grandchildren, nieces and nephews,” a press release from Virgin Money stated.

“They won’t be able to spend the money until they retire but you’re giving them a head start now so that they don’t have to save so hard later,” added the company.

Virgin charges a reasonably competitive one per cent annual administration charge, and monthly payments can be as little as £1.

The period of consultation on the government’s White Paper on pensions reform has now closed, with consumer group Which? backing the Pensions Commission’s call for a low-cost pension saving scheme in which workers will be automatically enrolled.

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