Billie Piper can call the tune on pensions

Dr Who star Billie Piper is probably not focusing too much on the retirement of her son Winston James Fox after celebrating the birth of her first child.

But the newborn could soon be on his way to being a millionaire if Billie, 26, and husband Laurence Fox, 30, put £100 a month into a pension, figures from Virgin Money show.

Investing £100 a month into a pension from birth to the age of 65 could produce a pension pot of £1,080,000 at the age of 65 and investing in a pension for a baby is child's play, says Virgin Money.

Starting a pension at the earliest available opportunity should not be ignored. With family and friends able to contribute to the pension pot, putting in a lump sum, or investing on a monthly basis can make all the difference.

Savers get tax relief on contributions of up to £2,880 each year. Tax relief turns this into £3,600, which is invested in the stock market to grow over the years, building up a tidy nest egg. This massive boost to their savings combined with a lifetime's stock market growth can give children a great leg up, and could set them up for life when they retire. As the pension is linked to stock market growth, it must be remembered that stocks can fall as well as rise which will impact on the final pension pot.

Grant Bather, spokesman at Virgin Money said: "With any savings plan the more you put in the more your child will get back at the end.

"But with pensions especially, even modest amounts saved now will make a big difference in later years.

"By devoting just £50 a month from birth until the child's 18th birthday, they will have a healthy pension pot of £23,700, which will continue to grow until the pension matures at 65, while contributing £50 a month until the child turns 21 will leave the child with a pension pot of over £30,000 (£30,700), before 40 years plus of inflation of potential growth.

If the full £2,880 was invested annually, taking into account tax relief, the pot would be worth close to £120,000 (£117,000) at the age of 18, while extending this to 21 would provide a pot of £151,000.

At 18 when ownership of the pension transfers to the child they could also decide to continue to invest in the pot themselves. By continuing to invest in the pension started at their birth, by the time they reach 65 they could have a pension of £540,000, while contributing to the ripe age of 68 could produce a pension pot of over £600,000 (£644,000), providing an annual income of over £42,000 if they continue to contribute just £50 a month.

Grant Bather added: "And don't forget, grandparents, aunts, uncles and other grown ups can also pay into your child's stakeholder pension once you've set it up. Remember though, your child can't access the money until they retire. But if they can't touch it they can't spend it. That's the whole point; it's their retirement and long-term prosperity you're saving for."

As with any pension linked to the stock market, the final returns they get will be linked to how the investments perform over the years. Changes to the tax regime could also impact on pension growth, while the effects of inflation must also be considered.