Parents in the dark over JISAs
More than half of parents have not heard of the Junior ISA (JISA) a year after the inception of the children's saving product, according to new research.
Friendly society Family Investments found in its poll of 2,000 adults that despite awareness improving, 56% of parents had still not heard of the product - down from 73% last year.
The news comes as it is revealed that just 72,000 JISAs were sold in the first five months after its launch in November 2011 causing organisations such as Family Investments to call on the government and industry to do more. The mutual society has estimated that the take up level is less than 3%.
Despite this, a huge majority of 92% of parents said they thought it was important to save on their child's behalf. Family Investments says parents simply are not aware of the options available to them to do so.
Start saving early
Figures from JPMorgan emphasise the importance of starting early when it comes to savings. The company found that regular savings of just £50 per month at an annual return of 5% could be worth £17,333 by the time a child reaches age 18.
And returns could be even higher for those in a position to sign up to the best deal on the market at the moment.
The Halifax Junior ISA is available to the children of adults already holding a cash ISA with the bank and offers a 6% interest rate. The next best deal is from Nationwide at 3.25%.
This article was written for our sister website Money Observer
An organisation owned by its members and managed for their benefit rather than the benefit of shareholders. Mutual societies include building societies, industrial and provident societies, such as co-operatives, credit unions and friendly societies. As they don’t have to pay dividends to shareholders, mutual societies generally offer lower mortgage rates and higher savings rates to their customers than banks.
Available from 1 November 2011, the Junior ISA will replace child trust funds (CFTs), which have been phased out. Junior ISAs will have a £3,000 limit and will be offered by high street banks, building societies and other providers that currently offer ISAs to adults. You can invest in either stocks and shares or cash. But, unlike CTFs, there will be no government contributions into each child’s savings pot. Money invested in Junior ISAs will be “locked in” until the child is 18, and the ISA will default to an adult one.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.