Anyone seeking advice on Child Trust Funds should speak to the provider of the fund, or their financial advisor, now that arguably one of the Labour Government’s better initiatives has been cut by the Conservative/Liberal Democrat coalition.

People seeking advice on Child Trust Funds need to know the basics, especially that until the legislation is passed by the new Government, it’s business as usual.

So for those seeking advice on Child Trust Funds, the best is to continue as before. Child Trust Fund vouchers will still be issued to qualifying parents and those that have already been issued, will remain valid until they have naturally expired. What’s more, Her Majesties Revenue & Customs (HMRC) will keep opening Child Trust Fund accounts in cases in which the voucher has not been used by the expiry date and Government contributions will remain at the current level.

The advice on Child Trust Funds is therefore straightforward: it’s a matter of waiting until legislation calls the programme to a halt and details how it will do that. Then the new Government has indicated that it will reduce contributions at birth and stop contributions altogether at age seven, from 1 August 2010. New Child Trust Fund vouchers will stop being issued by HMRC from 1 January, 2011.

Advice on Child Trust Funds will likely centre on key questions, including:

Question 1: I already have a Child Trust Fund for my child. What happens now?
Answer 1: They will continue as before, with the same basic rules and limitations governing their use. No withdrawals until 18 and the investment will still benefit from a tax free status. And friends and family will be able to top up the fund to a maximum of £1,200 per year.

Q2: I have a voucher, but haven’t used it yet. Is it still valid?
A2: Yes and even if you don’t use it, HMRC will start an account on behalf of the child and let you know it has done so. The Child Trust Fund will then operate normally.

Q3: What if I’ve lost my voucher?
A4: You can get a replacement at the official Government Child Trust Fund website.

Q4: Now that the Child Trust Fund idea is being wound down, will the Government withdraw the money it has placed into the account?
A4: No. That money is safe and will operate as originally planned.

Q5: Am I able to move my Child Trust Fund account from provider to provider?
A5: Yes. The basic rules as devised at the set-up of the scheme still apply.

These are basic changes for those who are seeking advice on Child Trust Fund changes. For more details, speak to a qualified professional.

Guest Article by Neil Camp

It seems it’s recession, what recession when it comes to children’s presents this Christmas with an estimated five billion being spent on keeping the little ones happy over the festive season, up 20% from last year.

The figures come out of research conducted by The Children’s Mutual, which is one of the UK’s largest providers of Child Trust Funds. They say that the average child in the UK will get £380 worth of presents this year, compared to £316 in 2008.

And not only toys. Alongside an estimated over £4 billion worth of toys and other presents underneath the UK’s Christmas trees, there will be a staggering £960 million in cash given as well. The average amount of cash given is £73, although around 25% will receive around £100.

Unsurprisingly, the sensible souls at The Children’s Mutual are asking parents, grandparents, relatives and friends alike to put some of this cash to better use than as a means of buying the video game. But how kids will respond with a letter from their loved ones explaining a decision to invest part of the filthy lucre they were expecting in their Child Trust Fund is not clear.

But David White, Chief Executive of The Children’s Mutual, is undeterred:
“It’s great news that the recession is not affecting kids’ stockings this Christmas. However we are urging parents to think about their children’s futures and ask friends and family to invest a portion of this money for the long-term.

“Around £200 is spent on presents that won’t make it past Easter, but if this money was invested in a Child Trust Fund each year, it could be worth £6,100 by the time it matures when the child turns 18. This way friends and family can give a gift that could last well beyond the child’s 18th birthday and providing them with a nest egg for the future.”

Although quite what kids will make of his reasoning remains to be seen, although The Children’s Mutual do point out that top ups into Child Trust Funds do get a timely boost at Christmas with an average increase in ad hoc payments of just under 25% during the festive period.

So it’s hopefully less cash on the hip this Christmas and better financial planning, although don’t the Government still say that only the brave (or foolhardy) consumer will save the county from continued recession?

Guest Article by Neil Camp 

Those looking for the best child trust fund in which to grow their offspring’s nest egg might be interested to learn that financial advice magazine Investment Life & Pensions Moneyfacts has once again chosen the same team, for the fourth time.

Taking the accolade is The Children’s Mutual which fought off more than 70 Child Trust Fund providers, including several national banks and building societies, to win the celebrated award.

Investment Life & Pension Moneyfacts come to their decision via their own analysis, plus opinions of its IFA readership. They state that the award recognises companies that have consistently offered the most competitive products, the best levels of service and shown the greatest innovation during the last 12 months.

Tony Anderson, marketing director of The Children’s Mutual, said:
“This is a great achievement for the organisation. To win the award every year since it was introduced makes me immensely proud of the hard work and professionalism of our employees here in Tunbridge Wells and our colleagues in partner relationships in Cheltenham and Glasgow.

“We try very hard to put customers at the heart of what we do and as a result we are the choice of one in four families opening a CTF account for their children. I’m delighted that our hard work and high standards continue to be recognised by professionals in our industry too.”

Richard Ealing, editor of Investment Life & Pension Moneyfacts, said:
“The Awards have become a highly sought after accolade of excellence within the financial services sector and recognise the outstanding achievements of providers which offer the very best products and service levels. The Children’s Mutual must have a winning formula. Being presented with this prestigious award on no less than four consecutive occasions is a magnificent achievement.”

Child Trust Funds are a government initiative. It sets out to provide a tax efficient, long term savings vehicle for all eligible children and each eligible newborn child (born on, or after 1 September 2002) receives a £250 Child Trust Fund voucher, or one worth £500 for low income families). This is given by the Government when their parents register for Child Benefit. A second contribution of £250 (£500 for low income families) will be given by the government when the child reaches seven. Furthermore, parents, family and friends can all then add to this account up to a maximum value of £1,200 each year.

The Children’s Mutual is one of many tailor-made funds that offer a home for the government’s largesse. They claim to be the only UK company that specialises in long term savings for children. And they say that they are currently the choice of one in four parents for their child’s Child Trust Fund, with more than 700,000 accounts. And, they add, this expertise has led several financial institutions and family-focused high street retailers to choose The Children’s Mutual as their stakeholder Child Trust Fund provider.

Guest Article by Neil Camp