What does the Child Trust Fund offer?

The Government gives a voucher worth £250 to children born on or after 1st September 2002. You can invest the voucher on behalf of your child, with a number of carefully-chosen financial organisations - and Scottish Friendly is one of them. The Child Trust Fund then matures when the child becomes 18, giving them financial back-up when they need it most.

It works like this:

1. The Government automatically sends a Child Trust Fund voucher to a new child (born on or after 1st September 2002 and receiving Child Benefit)
2. You choose where to invest the money on behalf of your child
3. You and your family and friends can also add money to the Child Trust Fund - either as a regular amount each month, or in one-off payments - to a maximum of £1,200 per year (once added this money cannot be withdrawn)
4. At age 18, your child will receive a lump sum to use however they choose - completely free of tax - no Capital Gains or Income Tax under current legislation

For more information on how to get your voucher, or if you have lost your voucher, visit the Government's Child Trust Fund website (opens in new window) or call the Government helpline on 0845 302 1470.

Why choose the Scottish Friendly Child Trust Fund?

There are a number of Child Trust Fund accounts to choose from - including stocks and shares and basic deposit accounts. However, the Government is keen for people to have access to a type of investment known as a 'Stakeholder' account.

Scottish Friendly offers a ' Stakeholder ' account which means:

• It invests partly in shares to take advantage of potentially higher returns over 18 years, compared to a cash deposit account (although the value of shares can fall as well as rise, whereas capital would be protected in a deposit account)
• We shift the investment emphasis from shares into fixed interest and cash around your child's 13th birthday. This is called 'lifestyling' and will help protect the account during the last few years of the investment term.
• It's affordable - extra payments can be placed in the account from as little as £10
• It has low capped charges of just 1.5% per year with no up-front charges

All this means our Stakeholder account offers a good balance between potentially high returns and a reduced level of risk. There's also the extra assurance as our account complies with the Government's stakeholder criteria . However, this doesn't mean that returns are guaranteed or that Stakeholder accounts are suitable for everyone.

Remember that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is invested) can go down as well as up and is not guaranteed.

How much can I invest?

Your child will automatically get the Government's free £250 voucher (and an additional payment of £250 for children in families with low incomes who receive Child Tax Credit), which will get your child's savings off to a good start.

But you, or friends and family, can really help by adding extra money. You can top-up your child's account by up to £1,200 each year. Adding extra could help make the fund grow even more.

Source: Scottish Friendly. These figures are examples and are not guaranteed. They are not minimum or maximum amounts. What you get back will depend on how your investment grows. You could get back more or less than this. Maturity figures are based on a growth rate of 7% before charges. Do not forget that inflation would reduce what you could buy in the future with the amounts shown.

How can I save for older children?

Only children born on or after 1st September 2002 are entitled to start up a Child Trust Fund. If you have older children who are not eligible, you could think about saving for them with a Scottish Friendly Child Bond - it's a tax-free savings plan aiming for long-term growth.

Apply now

Applying is easy. Simply click on the Apply Now link to download an application form and read the Simplified Prospectus. Then complete it and post it with the CTF voucher to:

Scottish Friendly Assurance, FREEPOST, Glasgow G2 4BR

Or, you can request an information pack to be sent to you in the post. This pack includes further Child Trust Fund information and an application form.

If you apply for this product, for your records, we recommend you print or save a copy of this and any other relevant pages together with a copy of the Simplified Prospectus.