Child Trust Fund

Discussion in 'Finance, Property, Law' started by Forces_Financial, Feb 16, 2005.

Welcome to the Army Rumour Service, ARRSE

The UK's largest and busiest UNofficial military website.

The heart of the site is the forum area, including:

  1. 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.
  2. OK - so what interest rates are you paying?
  3. 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.
  4. Can the account be kept running, even when I leave the Army ?

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

  6. 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
  7. There was a bit in the Sun about this:

  8. 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.

    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.