This article is designed to be a brief overview to help you save for grandchildren. You may wish to speak to a financial adviser for more guidance and information.
We all want our grandchildren to have a happy and secure future. For some of us, one way to help achieve that goal is to put money aside to provide them with some financial stability.
You might want to save for a specific reason, like a deposit for their first house, or to pay for their education. Alternatively, you might want to put some rainy-day money aside for them, for whenever they need it.
Regardless of your motivation, if you want to save for your grandchildren, read on for the answers to some of the key questions you’ll need to consider before you get started.
Can grandparents open a savings account for grandchildren?
While it’s easier for parents to open a savings account for their children than it is for grandparents to do so, there are still several ways you can save for your grandchildren.
Some of the options you could consider include:
- Children’s savings accounts – can be opened by grandparents on behalf of their grandchildren, although most will require permission from the child’s parents or guardian. Savings accounts are often regarded as the most flexible way to save for your grandchildren. While terms and conditions will vary by provider, it’s possible to open accounts that allow you to save flexibly and for the funds to be accessed on demand. Additionally, any interest earned won’t be taxed unless your grandchild has an income over £12,570 (in the 2025/2026 tax year). Shop around for the best interest rate though, as some can be quite low.
- Junior ISAs (JISA) – are ideal if you want to secure savings for your grandchildren until they turn 18. While grandparents can’t open a JISA on behalf of their grandchildren, it is possible to contribute to an account that’s been set up by their parents or legal guardian. While they’re less flexible than a savings account, JISAs offer a tax-efficient way to save and will help ensure that savings are maintained for the long-term. Once your grandchild turns 18, their JISA will automatically transfer into an adult ISA, and they’ll be able to access their funds.
- Parental trusts for children – are set up by parents for children under 18. They come in several forms, including bare trusts. Trusts are set up in the child’s name, but the trustees manage them until the beneficiary is old enough to do so themselves. This is currently set at 18 in England and Wales, and 16 in Scotland. Some bare trust providers will allow grandparents to open a trust for their grandchildren, while others will require permission from the child’s parents or legal guardian first.
- Junior pensions – if you want to plan way ahead, then a Junior Self Invested Personal Pension (SIPP) could be worth considering. As with JISAs, grandparents can’t open them directly, so will need to coordinate with their grandchildren’s parents or legal guardian. Junior pensions can be opened as soon as your grandchildren are born though, and they’re currently protected from inheritance tax.
For the 2025/2026 tax year, the Junior SIPP allowance is £3,600, including a government contribution of 20%. Therefore, if you pay in £2,880, the government will add £720 to increase the total to £3,600.
The only downside for your grandchild is that they won’t be able to access their pension funds until they reach the Normal Retirement Age. This is set to be 57 years old from 2028. Adding to a SIPP regularly can amount to a large sum by the time they reach retirement age. However, as with any investment, the overall value of the SIPP can fall as well as rise.
- Premium Bonds – offer an alternative way to save for your grandchildren. While they don’t generate interest, Premium Bonds are entered into a monthly prize draw, with prizes of up to £1 million. Anyone who is 16 or over and has a UK bank account can buy Premium Bonds. However, anyone can buy them as a savings gift for a child under 16. Regardless of who buys them, Premium Bonds are managed by the child’s parents or guardian until their 16th birthday. Once they turn 16, they’ll manage their own Bonds. It’s possible to cash in all or part of your Premium Bonds at any time though, meaning the funds can be accessed if necessary.
What savings accounts can grandparents open for grandchildren?
As we’ve explained above, options for opening savings accounts for your grandchildren are limited. Additionally, you may need to gain approval from your grandchild’s parents or legal guardian first. Having said that, it is possible for grandparents to open a savings account for their grandchild with some providers, set up a trust for them, or gift them Premium Bonds. In contrast, it’s not possible to open a JISA or Junior SIPP for them.
Can I put money in a trust for my grandchildren?
As we’ve mentioned, it is possible to put money into a trust for your grandchildren. Trusts come in several forms and it’s important to get professional advice to understand how the trustees might manage those funds for the benefit of the beneficiary.
How to save for grandchildren
As with any type of saving, there are several approaches you could take. We’ve looked at a range of options for where to save. However, to help you decide which one could work best for you and your grandchildren it’s worth considering:
- How much you plan to save: this will be determined by how much you can afford to save after you’ve paid for your own living expenses. You may also be trying to save for something yourself, or saving for your children, as well as your grandchildren.
- Regular saving or a lump sum: knowing the answer to this question will help you decide which option will work best. You may want to put money aside on a regular basis, say monthly or annually. Or you may decide to invest a lump sum and leave it to mature as your grandchildren grow up.
- Save tax-efficiently: we all have an ‘annual exemption’ of £3,000 every financial year that we can gift to people without any tax implications. Just be aware that this figure is the total amount you can give away each year, not the total you can give to any one person. So, you can give three people £1,000 each, but you can’t give each of them £3,000 without there being tax implications. Each person has a £3,000 allowance though, so two grandparents could give away a combined total of £6,000 each tax year.
On top of this, each tax year you can give away tax-free cash gifts of up to £250 to as many people as you like. This only applies if you haven’t used another allowance on the same person though. While it’s possible to gift more than these amounts, doing so may incur taxes, such as inheritance tax, later. If in doubt, speak to a financial adviser before taking any action.
Saving for your grandchildren’s future
You may not have a particular objective in mind when you start saving for your grandchildren, and there’s nothing wrong with that. However, having a goal can focus your efforts and give you a target to aim for. Some of the things that grandparents might want to put money aside for their grandchildren for include:
- School fees
- University
- House deposit
- Travelling
- First car
- Wedding
- Emergency funds for unexpected expenses.
As you can see, there any plenty of reasons why you may want to save for your grandchildren, and several ways you can do it. If you decide saving for your grandchildren is something you’d like to do, consider the options carefully and if you’re unsure about anything, or just want some advice, speak to a financial adviser.
