The first Child Trust Funds (CTFs) were launched in April 2005, with accounts opened for all children born from 1 September 2002 onwards. Now in 2018, we have just reached the first point when some CTF beneficiaries have turned 16 and so could take control of their account. In this article we look at what CTFs are and why some young people (or their parents) may want to transfer them into a Junior ISA.
Published on 26 Sep 20183 minute read
Written by Jason Hollands
CTFs were launched in April 2005 as a simple savings account for children. The assets held in Child Trust Funds (or Junior ISAs) cannot be withdrawn until a child reaches 18. The account will be set up and held in the name of a single registered contact e.g. a parent or guardian until the child turns 18 and they become the full, legal owner of the account.
But from age 16 a child has the right to request that they manage the account themselves and become the registered contact. Importantly, this is a right and they do not require the consent of the existing registered contact, they would just need to contact the CTF provider and provide the relevant details.
Many parents may have forgotten about their child’s CTF or have lost track of their accounts, for example by failing to notify the providers of a change of address. This means some of those turning 16 may not know about the savings, let alone their right to become the registered contact. The good news is that there is a tracing service available to use on the Gov.uk website.
The majority (78%) of CTF accounts were originally invested in ‘stakeholder’ funds*. While these were the default option and were presented as good value for money because charges were capped at 1.5%, in reality this is a very high fee for what was usually a UK index tracker fund.
Fortunately, you can also transfer a CTF to a Junior ISA. CTFs and Junior ISAs have identical tax features and annual allowances, but Junior ISAs offer a much wider range of high-quality investments to choose from. Usually, they also have less costly fees that are often much lower than 1.5%. However you should check for any exit fees when transferring from your current providers before taking action.
If you or your child would like to transfer a CTF, why not check out our Junior ISA?
If you would like to know more about our award-winning Junior ISA or want to know more about what we can do for you, call us on 020 7189 9999 or email email@example.com.
*According to The Association of Financial Mutuals, September 2018
The value of an investment may go down as well as up and you may get back less than you originally invested.
This article does not constitute personal advice. If you are in doubt as to the suitability of a product please contact a financial adviser.