Child trust fund transfer ban to be lifted
The government is to lift the ban on transfers from child trust funds (CTFs) to Junior ISA, according to Citywire and the Daily Mail.
Chancellor George Osborne said the move ‘supports hard-working families who want to save for their children’. The ban is expected to be lifted in April 2015.
‘I’m delighted that, as a result of these changes, over six million children who currently have savings in a CTF will be able to benefit from better returns and lower charges on those savings,’ he added.
The move follows pressure from campaigners to unlock the funds, after the coalition government scrapped the £250 payment to newborns into the funds. CTFs were replaced with Junior ISAs, which do not attract a state contribution, leaving providers with little incentive to provide the best returns on the obsolete accounts. Some providers have also introduced higher charges on CTFs.
In our opinion this is great news. The days of the CTF have been numbered since the launch of the Junior ISA. CTFs have been in terminal decline since 2011, seeing millions trapped in expensive products or suffering lower interest rates than their Junior ISA counterparts. This change will pave the way for a significant improvement in choice and outcomes for over six million children.