Parents will be able to transfer money held in Child Trust Funds (CTFs) into more favourable Junior Individual Savings Accounts (JISAs), under new plans announced by the Government.
In a major change to the existing rules, the Chancellor George Osborne has revealed that the current ban on such transfers will be lifted from April 2015.
CTFs were introduced by the previous Labour Government and were available to children born between 1 September 2002 and 31 December 2010 inclusive.
However, the accounts were scrapped by the coalition Government and replaced with the new JISA, which offers more generous rates of return.
The two types of account are currently treated separately, meaning those children with a CTF are unable to open or move money into a JISA. Experts say this has resulted in an estimated six million young savers being ‘trapped’ in low-paying CTF accounts.
The move will no doubt come as welcome news to parents, with young savers set to benefit from greater choice and more generous savings rates when the new ruling comes into effect next year.
Up to £3,720 can be invested in a JISA in 2013/14. Both the CTF and JISA subscription limits will rise to £3,840 from 6 April 2014, in line with the CPI measure of inflation.
