Due to launch towards the end of 2011, the new accounts will be structured in a similar way to existing ISAs with similar caps on contributions but, like CTFs, with the condition that funds will be 'locked in' until the child turns 18. Unlike the CTF scheme, where the Government made a startup contribution to each account, as well as a top-up contribution to some, the new Junior ISAs will be delivered by private providers and will receive no lump sum payout from the Government.
The financial secretary to the Treasury, Mark Hoban, said that he was "committed to ensuring that all parents can save for their children's future in a simple and straightforward account." He went on to add that the new scheme would provide people with a tax-efficient way of saving for their children, whilst costing the Government half a billion pounds a year less than the current scheme.
Whilst many will welcome the plans, there will still be those who may look at other savings options to avoid missing out during the interim period between the end of CTFs and the beginning of Junior ISAs.
Don't forget that if you haven't yet opened a CTF for a child born before 1 January 2011, there is still time. Visit our website www.4thekids.com to find out more about our self-select CTF or to open an account.
