After several weeks of “prompting” by my wife I finally got around to doing what I intended to do as “soon as I could” and upgrade my kids’ CTF, to a Junior ISA.
It was like mowing the lawn: something always seemed to get in the way; playing FIFA 15 just one more time, oh and working out when to order FIFA 16, I’ll just check amazon.com, “Oh, what’s that? A coat hanger that doubles as a TV?”…. It’s easy to get distracted!
It’s a shame because whilst I put off jobs like mowing the lawn I always feel a great sense of satisfaction once they are done. So too with the upgrading the kids’ accounts to Junior ISAs. Whilst it sounds complicated it’s anything but.
Firstly (and here’s the hard part) due to government regulations you need to do some of it on paper as a ‘wet’ signature is required before anyone can upgrade. But once you’ve completed the form and let your new provider know who your old provider is, you send on your form and the rest is all taken care of.
Single parent responsibility
A couple of pointers though. If you are not the child’s registered contact on your Child Trust Fund (there can be only one) then you won’t be able to effect a switch. This was why I couldn’t respond to my wife’s prompting to get it done by saying “Why don’t you do it then?”
Alternatively if your Child Trust Fund doesn’t have a registered contact (which is likely if you didn’t set it up yourself but the government allocated the money to a provider on your behalf) then you’ll need to register with your existing provider first. But once that’s done you can complete your form send it to your new provider and they will do the rest.
Of course you might be wondering why should I bother upgrading at all? And like mowing the lawn it’s a question I can sympathise with! However there are a number of advantages to seriously thinking about the CTF to JISA upgrade.
Firstly perhaps you just set it up with your bank or building society? And why not – it’s the kids’ money after all so why take a risk and invest in something that could fall in value? But have a think what has happened to interest rates over the last few years. Since December 2007, UK base rates have consistently been lower than inflation until April 2015 when the UK economy entered a period of deflation*. It may well be that the safe investment in cash for your Child Trust Fund has actually meant that your Child Trust Fund has been falling in real terms over the last few years. What was that about not wanting to take any risks?
Secondly if your Child Trust Fund was set up by the government it’s likely that you didn’t think too hard about the investment choice or the provider that was selected on your behalf. They may well be doing a great job, but equally they may not. Also it’s probable that any new options and functionality for child savings are more likely to be found in open Junior ISA contracts rather than Child Trust Funds, so it’s well worth having a good look.
Scottish Friendly has a Junior ISA product which offers:
- A wide range of investment funds
- Full online access and control
- The ability to set up different pots (as many as you want) within your child’s Junior ISA so for example you can have one for University fees, another for the first car and even separate pots from different payers such as mum and dad, granny and grandad, friends or aunts and uncles
- And the ability to integrate your My ISA with My JISA so you can see and manage them all on line. You can even name pots within your own ISA allowance for your children which means you can save for them whilst retaining complete control of the money (no blowing it on a motorbike at 18).
Plus they’re affordable. With payments starting from £10 a month you can invest a little over the years and it could amount to a nice sum. Please remember that as with all stock market investments, your investments can go down as well as up and the child may get back less than you have paid in. Tax treatment depends on individual circumstances which may change in the future.
For me the most satisfying part of the switch was when I logged into Scottish Friendly’s My Plans portal. There I suddenly saw my ISA with 4 different pots, two of which were named for the kids, but on the same screen I saw the shiny new My Junior ISAs with their CTF transfer pots. Indeed so satisfying was it I decided then and there to set up two new policies for each of the kids within their Junior ISA, something that took minutes to do.
That final decision of mine probably lies at the heart of why you should consider upgrading your Child Trust Fund. It’s not actually about all the new functionality and potentially better choices at your disposal with a Junior ISA; it’s the fact that simply by looking, your instinct will be to save and invest more for your children. You’ll find just like procrastinating about mowing the lawn, when you finally finish up you’ll feel a sense of achievement and wonder whatever took you so long. So, come on, what are you waiting for!