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Savings and ISA provider Scottish Friendly is today calling on all parents of children aged between four and 13 years old to check the status of their Child Trust Fund (CTF) after research revealed that over half (58 per cent) of parents with children in this age group were unaware of changing legislation that will allow them to move their money into a Junior ISA.
Following a widespread media and consumer group campaign, the Government announced last year that it will, from 6th April this year, give parents the option to voluntarily transfer any funds out of a CTF and into a Junior ISA (JISA).
According to HMRC, there are approximately 6.3 million Child Trust Fund accounts, while the research conducted by Scottish Friendly found that the current average CTF holds approximately £1,409 - meaning that as much as £8.9 billion currently held in these accounts could be moved to a JISA that will offer more flexibility and the potential for greater investment returns.
However, despite many parents being unaware of the forthcoming changes, when made aware, the vast majority of those surveyed in the Scottish Friendly report (80 per cent) said that they would be likely to take advantage of the new freedoms and move their child’s money to a JISA.
Calum Bennie, savings expert at Scottish Friendly, commented:
"The new rules are voluntary but essentially give parents the opportunity to seek out accounts with better interest rates or better growth potential and allow for more flexibility when building a savings pot for their children.
"There was a nationwide campaign to bring about these changes and allow more freedom in how parents save for their child’s future. However, no sooner was the campaign successful it seemed to drop-off the radar. So much so, that now there is a very real danger that if more isn’t done to let people know about the change in rules, parents may just end up leaving their money in a CTF where interest rates can be as little as 1.05%. It took a considerable amount of persuading the Government to make these changes, so it’s important these hard won gains aren’t forgotten about.
"While the decision on how to save for a child’s future is completely up to the individual, and dependent on a number of factors, it is important that parents are aware of all of the options out there so that they are able to make the best decision for their children. You wouldn’t just buy the first house you were shown, so why should parents settle for meagre interest rates on many CTF cash or poorly performing stocks and shares accounts when there are so many other options out there. Those parents who do plan to leave their money in CTFs should do so out of choice, not apathy."
Scottish Friendly is not responsible for the accuracy of the information displayed on externally linked third party websites. The Scottish Friendly Group of Companies consists of the following companies: Scottish Friendly Assurance Society Limited – Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Member of AFM, Member of ABI: Life, Savings and Investments. Scottish Friendly Asset Managers Limited – Authorised and regulated by the Financial Conduct Authority. Member of The Investment Association. Registered in Scotland No 187215: OEIC Managers, ISA Managers. Scottish Friendly Insurance Services Limited – Authorised and regulated by the Financial Conduct Authority. Registered in Scotland No 113007. SFIS (Nominees) Limited - Registered in Scotland No 397351. Head office: Scottish Friendly House, 16 Blythswood Square, Glasgow G2 4HJ.