A new savings scheme designed to help adults save for their children is to be launched in the UK from November 2011. The Junior ISA is set to have an annual allowance of £3,000 but, in a key
difference from existing ISAs, the money will be locked in the account until the child is 18.
800,000 children a year to benefit from the new savings scheme
The Guardian reports that the annual allowance of £3,000 ‘can be invested in stocks and shares or in
a cash deposit’. The Junior ISAs will be sold by investment companies, friendly societies, banks and
building societies.
The Government expects 800,000 children every year to benefit from the new account.
Chancellor George Osborne told MPs last week: “I know that these children face particular
challenges, and I can tell the house [of Commons] that the Department for Education will work with
others to make the necessary funding available to ensure that we can provide the support that they
deserve.
“We will work with charities and interested parties to develop detailed proposals funded by the
government, so that Junior ISAs can best support these children.”
Child Trust Fund to be brought in line with Junior ISA
Anyone who holds a Child Trust Fund (CTF) account will not be allowed to apply for a Junior ISA.
However, the Government has announced that the Child Trust Fund investment limits will be raised
from £1,200 to £3,000 in order that fund holders do not miss out.
The Guardian reports that ‘all children born between 1 September 2002 and 3 January this year
automatically received a CTF voucher for £250 or £500 (for those from low income families) at birth,
and again on their seventh birthday.’
John Reeve, chief executive of Family Investments, a friendly society with more than a million CTFs
under management, said: “The Junior ISA will be a welcome tool to help families save towards
university fees.”
