Following months of campaigning from savings institutions and investment companies, George Osborne has finally proposed that parents should be able to transfer old child trust funds into Junior ISAs.
JISAs were introduced in November 2011 as a means to encourage tax-free saving for children, replacing their predecessor the child trust fund which was scrapped earlier that year.
However, the six million plus holders of child trust funds have been prohibited from moving their money into newer Junior ISAs – which in many cases have offered higher rates of interest or better terms – disadvantaging younger savers simply by virtue of their age.
Danny Cox, head of financial planning at Hargreaves Lansdown, said: "Common sense has broken out at last. Child trust funds have been in terminal decline since 2011, seeing millions trapped in expensive products or suffering lower rates than their Junior ISA counterparts. This consultation will pave the way for a significant improvement in choice and outcomes for more over six million children and ultimately lead to a full merger."
Junior ISAs work in much the same way as adult ISAs - with both cash and stocks and shares options available. The annual allowance is lower however at £3,600 and the money can only be accessed once the child turns 18. At this point, it can be rolled into an adult ISA.
Regular investment into children savings schemes can be a very effective means of saving for a child or grandchild. According to Hargreaves Lansdown £100 a month paid into a Junior ISA over 18 years could grow to around £38,000 (assuming 6% annual return).