Junior ISAs fail to take off

| November 1, 2012 | 0 Comments
Junior ISAs fail to take off

A year has passed since the government replaced Child Trust Funds with Junior ISAs (JISAs) but more than half of parents are unaware that they exist, according to research by friendly society Family Investments

Children born between 1 September 2002 and 2 January 2011 were eligible to open a Child Trust Fund and to receive a contribution of up to £500 from the government.

However these payments stopped on 3 January 2011 and JISAs were offered as an alternative, providing long term, tax-free savings accounts for children.

In its survey of 2,000 adults, Family Investments found that 56 per cent of parents have not heard of Junior ISA.

Awareness is improving though, as in a similar survey last year 73 per cent of parents were unaware of the product.

Just 72,000 JISAs were sold in the first five months after its launch in November 2011.

With six million children eligible for an account, this represents a take up level of less than 3 per cent.

JISAs have not had the benefit of the publicity which surrounded the launch of Child Trust Funds, and there are still only 33 cash and 27 stocks and shares JISAs available.

Also, they do not have the attraction of a government contribution and children are given full access to the account when they reach 18, which could deter parents who wish to hold onto control of the money to ensure that it is spent wisely.

Family Investments wants the government to do more to promote the product.

Meanwhile NatWest is re-introducing its piggy banks in an effort to attract young savers.

NatWest first started giving piggy banks alongside children’s savings in 1983, as a reward for reaching savings milestones, and ended the promotion in 1988.

The originals, which were manufactured by Wade, have become collectors’ items.

The bank, which is now part of the Royal Bank of Scotland group, is inviting children to design a new pig, which will be given to children who open a new bank account due to be launched next year.

Dan Jones, head of savings at NatWest, said: “It’s perhaps more important than ever for children to learn about the benefits of saving money, and, although our NatWest pigs are nearly 30 years old, the message is still relevant today.”

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