Child Trust Funds (CTFs) are savings accounts that were available for kids born between 1 September 2002 and 2 January 2011, which parents could use to deposit free cash vouchers of up to £250 (up to £500 if you were on a low income) that used to be handed out twice to each child by the Government. Now defunct, should you move it to the new kid on the block – the Junior ISA?
There’s no way to say this nicely – this is a bugger’s muddle. Most providers will not accept a transfer of Child Trust Funds into Junior ISAs. So any move can necessitate first moving from a Child Trust Fund to a Junior ISA with your old provider. Which can incur fees. And then move it to a Junior ISA with another provider.
Before moving do contact your current provider and ask them about all exit fees. That’s the first step.
Here is one lady’s story:
After reading an article on your site, I decided to do something about my children's neglected Child Trust Funds, currently with F&C Investments. I decided to move them to a Vanguard JISA. They have about £4k in each at the moment, but moving forwards, we're planning on investing £250 per month into each account (£500 total) for the next 9 years for our eldest, and 11 years for our youngest.
I sent an enquiry to F&C and received the email below.As I understand their response (which to me really isn't clear), the only way I can move the money from F&C CTF to Vanguard JISA, is to first move it to a F&C JISA, then out to a Vanguard ISA.
If I do this, they seem to be saying they will charge me:
- £100+VAT (2 x transfer out fees from the F&C JISA) - this seems outrageous as there's no transfer out fees from the CTF - they're forcing me to transfer out through this route
- A percentage of their JISA annual management fee, depending on how long it takes them to transfer (I think this is pro-rata - 2 x £50+VAT annual fee)
- 2 x dealing charge (£12+VAT per account) so £24+VAT as my Stakeholder All-Share tracker fund is not available for investment in their JISA
- Stamp duty?
But then at the bottom of the email they say: We do not make a charge to transfer CTF accounts to other providers, but we will deduct a pro-rata account charge when we transfer an F&C CTF account. To transfer a Junior ISA investment we apply a £50 plus VAT transfer out fee, and if shares need to be sold we will also deduct a dealing charge of £12 per Trust. We also deduct a pro-rata annual management fee when we close an F&C JISA account.
Unfortunately, the sums of money in the accounts was pretty small and so these fees just were not warranted. So this lady is sort of held hostage in an account she does not want to be in because of high exit charges. A child cannot have both a Child Trust Fund and a Junior ISA.
If you have lost track of where your child’s trust fund is, then you can search on the Government’s website but warning – you will need to go through the Government Gateway malarkey so have a stress ball at the ready ;0) It’s not as bad as it used to be – we went through the process (have a payslip and your National Insurance number to hand) and it took about 6 minutes.