Starting up a self-invested personal pension (SIPP) for children today could result in them being millionaires when they reach retirement.

This is according to Alliance Trust Savings, which worked out that the relatively small amount of £83 a month paid into an SIPP would generate a pension pot of £1,011,400.

It suggested that an SIPP is a good alternative to traditional savings accounts which tend to set aside money for short-term goals, although the child would have to contribute to the fund as an adult in order to reach the million pound mark.

However, the money may come in handy given that the Department for Work and Pensions recently suggested that more than ten million people alive today will live to the age of 100.

Even by paying £40 a month into an SIPP, the child could receive £398,800 when they retire.

Alliance Trust Savings spokesperson Steve Latto said: “A child SIPP should be a major consideration for parents who are looking for the peace of mind that comes from knowing they are helping create a significant pension pot for their child.”

Founded in 1888, Alliance Trust Savings currently has around 14,000 SIPP customers.