/ Money, Parenting

My wish – wean my son from his trust fund to a Junior Isa

Our son was born on Christmas Day 2010. This brings various logistical issues but a financial dilemma too. It’s one that I’m hoping will be rectified by Chancellor George Osborne in his Budget tomorrow.

Our baby was eligible for a child trust fund (CTF) and a £50 contribution from the government when he was born on Christmas Day 2010. We were delighted.

Ok, so the amount had been reduced from £250 from when the accounts were originally set up, but it was still £50 of free money for his future.

Junior Isas paying more than trust funds

However, our research shows that since CTFs were replaced by Junior Isas, the average cash Junior Isa is already paying more than a fifth more interest than the average trust fund.

So, the natural solution would be to open up a Junior ISA instead.

Here’s the problem – unfortunately that’s not an option as you can’t open a junior Isa if you already have a CTF, nor can you transfer your CTF to a Junior Isa.

This means that our son’s money, along with six million other CTF account holders, will be stuck in a trust fund until he reaches 18.

Nationwide trust fund versus Isa

To give you an idea of what he might be missing out on, Nationwide is paying 3.00% (including 0.9% bonus) on its Junior Isa. This compares to 2.1% (including 1% bonus) on its cash child trust fund.

Our research reveals that child savers could miss out on more than £300 million in interest over the next ten years. Are you affected by the situation or have you just missed the trap?

I can deal with working out how to squeeze our son’s birthday celebrations in between stockings, turkey and travelling between two sets of grandparents. But while working out what to do on Christmas Day remains a complicated challenge, my message to the Chancellor is simple – change the rules and make sure a generation of children don’t continue to miss out.

Simon says:
20 March 2012

Totally agree, 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? Outside of CTFs and Junior ISAs, there are relatively few high interest children’s accounts. For our children, we have a Halifax Regular Saver and a Lloyds Young Saver as these are the best accounts we can currently find…although it remains to be seen for how long they will remain market leaders before rates quietly drop.

I agree. As parents we’re being expected to save more and more for our children’s future with university fees going up and up and child benefit being axed for many of us. It’d be good if the government could sort this out in return for everything we’re doing.

Iyad says:
20 March 2012

Fully agree… It is very frustrating not to have an option to switch and make use of the new and more atractive products. we’re in the same situation as our child was born a couple of months earlier than mentioned in the artcile.

MarketRisk says:
21 March 2012

I agree. Waiting to see if the Chancellor makes the obvious change. My MP wrote to the Chancellor about the unfairness of this. Still waiting to hear back. Nationwide told me that this Junior ISA offering has a bonus of 0.9%, so actually the same as CTF. Utter nonsense. At the end of the bonus period I should imagine they will simply issue a new Junior ISA offering. Their logic was that it was to attract new business. Don’t they realise their unfairness in rates will ensure loyal customers (of which, apparently, I am one) are repelled?

Tony T says:
24 March 2012

I have a 3 year old grand-daughter for whom I contribute into a CTF with ‘The Childrens Mutual’. She is charged 1.5% pa. management charge and 5% commission on all monthly contributions. With inflation at 4-5% the CTF has to make approx. 10% to stand still. I also have very, very limited investment options, in fact almost none.
I have a second grandaughter who is one year old for whom I contribute into a Junior ISA with Hargreaves Lansdowne. The charges for this are mimimal in comparison and I have a whole world of investment options and choices.
I love them equally but I am afraid their investments will not be equal. All I want is a level playing field for them, whats the problem in allowing CTFs to be transferred into JISAs?
Come on Government get moving and help these children.

Alex Corbishley says:
9 July 2012

Has this story moved on at all? We have just made a representation to our MP about how our eldest daughter’s CTF disadvantages her compared to her younger sister who has a jISA. The response we got was pretty clear – the Treasury has no intention of rectifying the inequalities of the current system.

There’s an e-petition on this very subject which has just been created – if it gets 100,000 signatures it may be considered for debate in the House of Commons:


Will says:
23 April 2013

If you are like me, who doesn’t want your child savings stuck in CTF, please sign this e-petition.


It needs 100,000 signatures to be considered for debate in the House of Commons

It is so straight forward, just your name, address and email id. Just takes 10 seconds to sign this petition.