- Research from Family Investments reveals just weeks before launch three quarters of parents are unaware of Junior ISA
- New-borns could miss out on £165m in the first year of Junior ISA
- Parents may struggle to find affordable Junior ISA products
The Junior ISA is designed to replace the Child Trust Fund as the default savings option for children but new research from Family Investments indicates that as many as half a million (511,000) of the 700,000 children born so far this year are unlikely to have an account opened on their behalf*.
The launch of Junior ISA is imminent on November 1st but the leading Child Trust Fund provider discovered that awareness remains worryingly low. Twelve months ago, 91 per cent of parents with children aged under-eighteen had not heard of Junior ISA but today 73 per cent of parents are still unaware of the tax efficient product.
Kate Moore, Head of Savings and Investments at Family Investments said: “Based on our experience with Child Trust Funds parents contribute an average of £27 a month to the accounts. Applying these figures to Junior ISA, newborn children could miss out on up to £165m within the first year of the new scheme alone**. In many ways this is just the tip of the iceberg as the Junior ISA is open to any child aged under eighteen who does not have a CTF.”
Despite the low awareness levels, 78 per cent of parents believe that saving for their children is important and when Junior ISA was explained, 59 per cent said they thought it sounded attractive.
The majority of parents (68 per cent) are looking to the Government to offer information on the product, while many others are looking for a steer from parenting groups (29 per cent). A significant majority (73 per cent) of parents said they did not think enough information had been made available to the public.
Kate Moore continues: “Awareness is clearly an issue for Junior ISA but we have a second concern regarding affordability. Our research also found that the average parent hopes to save an around £41.35 a month for their child over the next twelve months. This is great news, but our experience with Child Trust Fund suggests this may be optimistic. We are concerned that many of the investment-based Junior ISA accounts will only be offered with a minimum premium of £50 per month as providers try to attract the most wealthy customers, leaving ordinary parents with too few options.
“With household finances being increasingly squeezed over the next few years, our concern is that parents will have no choice but to take drift into a cash account as one the few affordable options, and in a low-interest rate/high inflation environment this could mean that many parents are losing money in real terms.
“With affordability such a critical factor, it is for this reason that we have chosen to offer a Junior ISA with a low minimum premium of just £10 a month. The Family Investments product will offer access to a stock market-based investment, which we believe provides the best potential for growth over the long-term.
Family Investments’ Junior ISA – key product features:
- An investment-based Junior ISA invested in a balanced fund
- Low monthly premiums starting at just £10
- Parents can manage their Junior ISA account online which allows them to download a statement, manage contributions and check investment performance.
- Family Investments Child Trust Fund customers, who also open a Junior ISA account for another child, can manage both accounts online with the same login.
- An ethical version will also be available
Recap of the key research findings:
- 73 per cent of parents with children under 18 are currently unaware of Junior ISA
- 78 per cent of parents feel it is important to save for their children
- Parents hope to save £41.35 a month for their child over the next year
- Once explained, 59 per cent believe the Junior ISA sounds like an attractive savings product
For further information visit: www.family.co.uk
* Research conducted by Populus amongst 2,000 UK adults, October 2011
** £165 million figure based on parents of 511,000 children not saving £27 a month over the first twelve months of Junior ISA
About Family Investments:
- Family Investments is dedicated to being the trusted supplier of financial solutions for the family.
- Family Investments currently looks after around £2.8 billion of family money for more than 1.5 million people in the UK
- Family Investments is a mutual with over 35 years experience providing investments for families. We are owned by our customers which means that we are directly answerable to them
- Family Investments is the UK’s favourite Child Trust Fund provider with 1.2 million Child Trust Fund accounts
- Our Child Trust Fund was voted best at the 2010 and 2011 Moneyfacts awards
- Family Investments offers an Ethical CTF which tracks performance of companies included in the FTSE4Good UK 50* Total Return Index
- Our expertise is widely trusted and recognised, which is why we’ve been chosen to provide the Child Trust Funds of these high street names; Barclays Bank, Santander, Post Office, Sainsbury’s Bank, Yorkshire Bank, Clydesdale Bank, Coventry Building Society, Northern Bank, Skipton Building Society and National Childbirth Trust and additionally provide Post Office ISAs
- Family Investments won the Business in the Community Award in the 2009 Sussex Business Awards. This recognised Family’s highly successful community and volunteering work
- Family Investments is the trading name of Family Assurance Friendly Society and is authorised and regulated by the Financial Services Authority
Follow us on Twitter: twitter.com/familyinvest
Visit our website: www.family.co.uk
For further information, please contact:
| Jonathan Henderson | Helen Searle |
| Hill & Knowlton | Hill & Knowlton |
| 020 7973 5930 | 020 74133153 |
| Jhenderson@hillandknowlton.com | Hsearle@hillandknowlton.com |
