Government Allows CTF Transfer to Junior ISA

Six million children with investments in child trust funds (CTFs) will now be able to transfer funds into junior ISAs, ending the "two tier savings system"

Emma Wall 23 December, 2013 | 3:29PM

The Government has finally ended the two tier children’s savings system. Child trust funds (CTFs) were launched in 2005 but scrapped six years later when a more competitive Junior ISA (JISA) was introduced, which offered children and their parents much more investment choice within a system that much more closely mirrors the adult tax-efficient ISA.

Any child born before September 2002 who did not have a CTF was eligible for a JISA, as are all children born on or after January 3, 2011. For both CTFs and JISAs the annual tax-free savings allowance is £3,600. The key differences between JISAs and the former CTF scheme is that the Government does not contribute to the former, but many more asset managers offer JISA eligible funds, meaning parents have a much greater choice for their children.

The CTF has been widely criticised, and parent groups had put pressure on the Government to allow CTF funds to be transferred into JISAs for nearly two years. The Government announced plans to look into the children’s savings market in this year’s Budget.

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About Author

Emma Wall  is former Senior International Editor for Morningstar

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