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Don’t forget CTFs, parents told

Don’t forget CTFs, parents told

Category: Savings

Updated: 26/10/2011
First Published: 26/10/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Parents whose children hold Child Trust Funds have been reminded to review their investments when the new Junior ISA is launched next week.

The new accounts are to be launched on Tuesday 2 November, and will allow parents to save up to £3,600 a year for their offspring.

The accounts will replace the CTF, which was scrapped as part of the Government's range of cost-cutting measures.

Previously, the Government had kicked off the child's savings by allowing parents to invest a £250 voucher into a fund of their choice.

Millions of children benefited from the CTF between 2002 and the beginning of 2011, and the Tax Incentivised Savings Association (TISA) has reminded parents that the amount that can be invested in the accounts is to rise from £1,400 a year to £3,600.

The move will bring the CTF into line with the new Junior ISAs.

"Whether your child has a CTF or a Junior ISA, it is important to ensure that the money is in an account that best meets their needs - bearing in mind that this is a long-term investment of 18 years," said Tony Vine-Lott, director general of TISA.

"I would urge parents with a CTF to make full use of the higher contribution limit and to regularly review the investment performance."

Recent figures revealed that £19.6 million is being paid into CTFs by direct debit each month by family and friends.

"Based on this, I expect the new Junior ISA to be as equally as popular,"
added Mr Vine-Lott. "There is a strong desire by parents to ensure that their children have a financial asset at 18.

"Both schemes allow family and friends to contribute towards this.

"It is often overlooked that schemes such as these also have the potential to improve the financial literacy of youngsters - it clearly demonstrates the benefits of regular saving over the longer term and that has got to be a good message to get across."

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