As parents we always want what best for our children. Be it now, or in later life when we may not be here to look after them. With the phasing out of the child trust fund all but complete and a wait until November for its replacement, the Junior ISA parents have turned to children’s stakeholder pensions as a way of investing in their parents futures.
Parents with children born since January 1st this year will find that their children are not eligible for a Child Trust fund voucher, and as such need other ways of saving for their children in a tax-efficient way.
The Junior ISA, which will replace the child trust fund and will provide parents with tax free savings of up to £3000 a year is coming soon but won’t be available until November.
Child Trust Fund providers have also been criticised for the poor returns their products have shown, and many parents are looking at other avenues now providers no longer need to attract new customers with their best fund managers.
The gap between the outgoing child trust fund and incoming Junior ISA has also caused some concern with those parents whose children are eligible for a Junior ISA unable to invest in a Junior ISA instead, regardless of which product offers the better returns.
The Daily Mail have gone as far as creating a campaign to get the government to merge the two products allowing parents the choice.
Parents disenchanted with the tax free savings accounts have started to look at other avenues while they wait for the Governments decision as a result of the campaigns.
Some parents are starting to look at Tax Exempt Savings Plans and Children’s Pensions as alternatives for savings for their futures.
Children’s pensions work in the same way as adults stakeholder pensions, with parents attracted to the benefits their children will see from savings that have so long to maximise returns. Tax incentives also increase the parent’s contributions by 25%, allowing parents to increase their own children’s eventual retirement income.
