Child Trust Funds may soon be tranferred to Junior ISAs
George Osborne today announced plans to set the wheels in motion for transferring the £4.8billion currently tied up in child trust funds (CTFs) into Junior ISAs, which offer better rates of interest. The Budget report states that a 12-week consultation will take place to determine the logistics of the transfer process.
Savings locked away
Child trust funds were launched in 2005 and were promised as a long-term savings vehicle available to children born between September 1, 2002, and January 2, 2011. There are an estimated six million child trust funds in Britain, each one holding on average £750. Until today's proposals, parents of children with CTFs haven't had the option to move their balance to gain more attractive terms.
Hope for parents
Danny Cox, of Hargreaves Lansdown, welcomed the news, saying: "We have already seen examples of where children with CTFs have been disadvantaged compared to those with Junior ISA. Common sense has broken out at last. Child trust funds have been in terminal decline since 2011, seeing millions trapped in expensive products or suffering lower interest rates than their Junior ISA counterparts. This consultation will pave the way for a significant improvement in choice and outcomes for over 6 million children and ultimately lead to a full merger."