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Government confirms Junior ISA plans

Government confirms Junior ISA plans

Category: Savings

Updated: 27/07/2011
First Published: 27/07/2011

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 It is now over 6 months old so the content may be out of date.

The Government has confirmed that providers will be able to offer Junior ISAs from the beginning of November this year.

The accounts were announced in October last year and will effectively replace Child Trust Funds (CTFs), which came to an end earlier this year as part of the coalition's range of austerity measures.

Both cash and stocks and shares Junior ISAs will be available, with an annual limit of £3,600 a year.

All children aged under 18 who were not eligible for a CTF will be eligible for a Junior ISA, meaning around six million children will be able to take advantage of the accounts, along with a further 800,000 more each year.

Parents are being encouraged to open them for their children, with family and friends adding to the funds to give their children a helpful nest egg when they turn 18.

Figures from JP Morgan show that 18 years of investing £3,600 every year, with 5% return per annum, would mean a savings pot worth over £100,000 by the time the child turns 18.

"The introduction of the Junior ISA provides a new option for parents to contribute to their child's future and give them a financial head-start in life," said Brian Morris, BSA head of savings policy.

"The annual subscription limit is three times greater than the current limit on the Child Trust Fund, so family members and friends will be able contribute more tax-exempt savings for a child than they are able to currently.

"The Junior ISA will plug some of the gap left by the coalition's abolition of the Child Trust Fund and the higher subscription limit is good news."

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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