The government should change the rules to allow transfers between Child Trust Funds and Junior ISAs. A child’s date of birth shouldn’t put them at a disadvantage with their savings.
Cribs, car seats, cash ISAs. The list of things you need for a new born baby is endless. With ours due in less than a month, we are beginning to think about where to save for our new arrival’s future.
There are some attractive deals available, with Cash Junior ISAs paying 3.25%, substantially above what you can get for adults. If we want to take more risk with their money then we could invest in a low-cost tracker fund through a Junior ISA.
Child Trust Funds verus Junior ISAs
But six million children born between 2002 and 2011 are locked out of these deals. The rules currently prohibit their parents from moving their Child Trust Funds into Junior ISAs.
Over the course of the next ten years these children could potentially lose out on more than £300m due to lower interest rates and higher charges. We don’t think it’s fair that the date of your child’s birth could stop you getting the best deals and a number of you agree. Conversation commenter Simon told us:
‘I’m most frustrated with the current set up. How can we expect children to be inspired to save for their future (with help from parents initially) with these type of barriers in place?’
Tony has two grandchildren, who will have different savings pots when they grow up due to the rules:
‘I love them equally but I am afraid their investments will not be equal. All I want is a level playing field for them, what’s the problem in allowing CTFs to be transferred into JISAs? Come on government get moving and help these children.’
Treasury to review the rules
The government has been consulting on whether to change the rules. We’re calling for families to be free to move their money from a CTF to a Junior ISA.
If the government allow the transfers, we want all providers to notify their customers about this and explain the different rates and charges involved. At the moment if you haven’t paid any money into your child’s CTF in the last year they only need to send you a statement at your child’s fourth, tenth or fifteenth birthday.
These changes would improve competition and give banks and investment firms a greater incentive to offer better deals – not to mention being fairer for parents.
Have you been caught out by the Junior ISA cut off? Do think the government will prioritise parents planning for their children’s futures?