Child Trust Fund

As the only military specialist on the Government approved list of distributors NAAFI Financial provide Forces families at home and abroad with easy access to Child Trust Fund accounts through their partnership with UK Armed Forces Benefit Society. They are the only distributor able to offer this service in Germany.

In welcoming his guests Al Voice, Managing Director of NAAFI Financial, said;
“Families are the lynchpin of our serving men and women, and we are proud to help in any way that ensures their future financial security. By making access to the Child Trust Fund easier for those in the Forces, wherever they may be in the world, we are doing just that.”

“Even though the Child Trust Funds won’t be open until April 2005 we have already received over 200 registration applications from our customers in the last two weeks. It’s the sort of start in life that every youngster will be grateful for when the time comes, and makes it easy for friends and family to contribute regularly to their special fund.”

A Child Trust Fund is a savings account available to all children born on or after September 1, 2002. The Government will issue each of these children with a voucher worth at least £250, or up to £500 for lower income families, to invest in a Child Trust Fund. Many parents have already received their vouchers and the Government intends to have distributed them all by the end of February. Parents, friends and family will be able to top up the fund by up to £1,200 per year, and the growth on the money will be tax-free.

UK Armed Forces Benefit Society is part of one of the country’s leading friendly societies, which has a wealth of experience providing savings for children, helping NAAFI Financial to offer simple and affordable savings plans for all the family.
Of the 3 different types of CTF account, the UKAFBS Child Trust Fund is a Stakeholder account, which means that the concept of interest does not apply because it invests the child’s money in the shares of UK based companies. As with all stock market based investments, you should be aware the value of the investment can fall as well as rise, and it’s possible that the child may not get back all that is paid in, although the Government has made certain rules for these types accounts to reduce the risk of investing in these shares.

Other types of CTF invest the child’s money in either deposit-based funds that pay interest, or high-risk investments.

Before deciding on the type of Child Trust Fund account wanted, it might help to think about your attitude to risk and the potential for greater returns. You should be asking yourself whether you want to put the child’s money in a very safe account – where there will not be a risk but the return on the money might not be very high – or whether you are prepared to take a small risk to try and get a higher return for your child’s future.

With a Stakeholder account like ours the child’s money is not put into just one company: Instead, it is invested in a number of companies in order to reduce the risk. Once the child is 13, money in the account starts to be moved to lower risk investments or assets.

This means that although the child’s money may not benefit if the stock market is performing well, it is protected from stock market losses as they approach their 18th birthday.

The charge on the stakeholder account is also limited to no more than 1.5% a year – which means the charge can be no more than £1.50 for every £100 in the account. The charges on all other types of CTF account, including those that offer an interest rate, are not limited in this way, so could be higher.

The stakeholder style account is the one the Inland Revenue will open automatically if parents don’t choose to use the CTF voucher before it expires.
Can the account be kept running, even when I leave the Army ?

or is it better to put it in a civvy firm ?
How does it compare with other long term savings plans.

the thing is - £250 isn't gonna be worth much in 18 years time, although I hear that the goverment are gonna give the child an extra bit of cash when they are 7.

I'm thinking that'd be best to try a put in another few quid each month, plus birthday/xmas money as well
There was a bit in the Sun about this:

Edition 1GADWED 16 FEB 2005, Page Cashflow 3
The Loot infant-ry;Exclusive

Special fund for army kids is right ammunition
THE babies of British forces are to get a special child trust fund
to be unveiled today.
The fund is aimed at children born after September 2002.
Families from the Queen's Royal Lancers Regiment in Catterick, North
Yorks, have already given the new fund, launched by NAAFI Financial
and Homeowners Friendly Society, the thumbs-up.
Many of the soldiers we talked to have recently returned from Iraq.
They are among millions of parents who have received child trust
fund vouchers for at least Pounds 250, which they can put into the
new accounts from April.
NAAFI Financial and Homeowners Friendly Society have formed their
alliance to serve British military families wherever they are
stationed in the world.
Al Voice, managing director of NAAFI Financial, told Cashflow: "We
are delighted to make access to the child trust fund easier for those
in the Forces wherever they may be in the world, enabling them to
both open and add to their children's accounts.
"In Germany, for example, we will be the only company providing this
service to the personnel posted there.
"Families are the lynchpin of our serving men and women and we are
proud to help to ensure their future financial security."
Children of members of the British forces qualify for child trust
funds even if they are born overseas. This is because their parents
pay UK tax and qualify for Child Benefit.
As with other child trust funds, parents and relatives can top up
the fund up to the value of Pounds 1,200 a year.
This special CTF allows payments of just Pounds 5 a time to be made
to the account, which will be invested in low-risk shares.
The account has a 1.5 per cent annual management charge but there is
no charge for transfers in or out or for switching to another
Savings in the account will grow tax-free and be released to the
child at age 18.
Young parents of all ranks at Catterick seemed pleased with the
NAAFI Financial scheme.
Trooper Chris Cheffings, 23, and wife Yvonne, 22, who live in army
quarters with their 16-month-old son Aidan, said: "We think it is a
very good idea." Chris recently spent seven months in Iraq.
So too did trooper Phil Gidley, 23, pictured below with 17-month-old
Chloe and wife Donna. The couple also have a son, Jordan, five.
Phil said: "We feel the child trust funds will allow us to make a
good investment for our child's future."
Another Iraq veteran, Corporal Paul Harley, believes the
Government-backed children's saving scheme is a bonus.
Paul, 29, and wife Carly, 25, have two children -15-month-old Aston
and two-year-old Bethan.
Homeowners Friendly Society launched the UK Armed Forces Benefits
Society in September to make its tax exempt savings products
available to all serving and retired members of the forces.
For details go online to or call Free-phone
on 00800 8585 8484.
For more information about the child trust funds, visit www.inland
Can the account be kept running, even when I leave the Army ?

or is it better to put it in a civvy firm ?
Whether you're in the Army or not won't make a difference to the Child Trust Fund account. Even though it is the Parent or Guardian that opens the account because they are the ones who receive Child Benefit payments, it is the child who actually ‘owns’ the money. Be rest assured though that the child won’t be able to have access to the money until they are 18!

As far as the sort of company to invest with, we are unable to offer advice because of the rules set out by our regulators, the Financial Services Authority. It’s up to the Parents or Guardian to decide what is the best option for their child. However, we can tell you that UK Armed Forces Benefit Society is part of a large ‘civvy’ company that has been specialising in children’s savings for the past 25 years. The UKAFBS CTF is a product that has been tailored to draw on all the investment experience of a civvy firm, coupled with the knowledge and understanding of military life that NAAFI Financial have, and is exclusively available to forces personnel and their families.

How does it compare with other long-term savings plans.
It is difficult to compare any Child Trust Fund account to other long term savings plans, although it is reasonable to expect that any company would want to ensure that their customers get back as much as possible. Some providers, like UK Armed Forces Benefit Society are mutuals, which basically means that they are owned by the policy holders, not a group of shareholders who are entitled to a cut of the profits. If the company does well, the members investments do well too!

It’s worth remembering that the Child Trust Fund is the only type of account where the child’s voucher can been saved. If parents don’t get round to choosing a provider for their child’s FREE money, the Government will open an account automatically instead.

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