Do you still have a Child Trust Fund?
Hands up to an admission from me. I’ve had a financial admin task on my to-do list for around eight years! For the eight years I have been running Mrs Mummypenny somewhere near the bottom of my money to do list has been to investigate the performance and fees of the child trust funds that I opened in 2007 and 2009 for my two eldest children. And to look into transferring a child trust fund to a junior ISA.
What is a Child Trust Fund?
Back in the day, all babies born between 1st September 2002 and 2nd January 2011 received a £250 voucher from the government. This was meant to kick start our children’s saving lives. These vouchers were given to around 700k children born each year. Many of us handed over these vouchers to two companies; Foresters and One Family and we opened Child Trust Funds.
This money would remain in the said fund (you could choose to save the money into cash or into a stocks and shares fund) until the child turned 18. Then they would have access to the money. The fund could be added to throughout the 18 years and around 30-40% of parents added additional top-ups to these Child Trust Funds.
In the haze of early baby life, I admit I didn’t pay much attention to the Child Trust Fund company I was signing up to. I read the leaflet that came in the bounty bag given to me when my first baby was born in the hospital and opened the account mentioned on the leaflet. Foresters was the company I went with and paid very little attention to the high fees of 1.5%.
Top-ups were added to the initial £250 for a few years of my children’s younger life. By the time my children started school there were decent amounts saved into the funds. They then laid untouched until now.
In early 2021 I mentioned on Twitter that I was looking into changing my Child Trust Funds into Junior ISA’s. Beanstalk reached out and mentioned that I should investigate their app and product. My first task was to look at the comparison tool to see how much my 1.5% fees would cost my children for the remainder of the time before they can access the funds. Beanstalk has a clever tool which compares the fees you are paying with your current child trust fund provider to Beanstalk, where fees are considerably lower at 0.5%.
Savings in Fees
My 13-year-old has a balance of £2,000 and switching over to Beanstalk from Foresters would save us £100 in fees between now and the age of 18. My 11-year-old has a balance of £1,500 and switching over to Beanstalk from Foresters would save £105 in fees between now and the age of 18.
I was sold, this is a significant amount of fees when compared to the amount of money saved into these funds for my children. I want them to have the most amount of money possible when they reach 18. Savings on fees are a no-brainer. And I’m annoyed at myself for leaving it so long to investigate and get a better deal for my children’s savings.
Starting the transfer process
I downloaded the app, that you can get from the Android or IOS store here . The app has a very simple interface. The process was super easy to arrange for the transfer of the Child Trust Fund over from Foresters. I just popped in my child’s name, date of birth and address.
You next need to choose how your junior ISA allocated the funds. Split between cash or stocks and shares, using a simple slider. The next option is to tell Beanstalk if you have an existing account to transfer over. I tapped yes for the Foresters account that I wanted to transfer over.
This triggers an automated paper form that Beanstalk email to you. Print this out and add the account details of the child trust fund that you want to transfer. Post the forms to the freepost address provided.
Beanstalk confirmed via email when they had received the transfer forms. Around three weeks later I received confirmation that the funds had been transferred over to Beanstalk. I can now see the balances in the app. Such a simple process that I really wasn’t expecting!
Open a Brand-New Account
It is even simpler to open a brand-new account. I have done this for my third child who missed out on the £250 voucher at birth, born in 2012. Just pop in name, date of birth, and state address is the same as mine. Again, use the sliders to chose between cash or stocks and shares allocation of savings. And then your account is set up.
The junior ISAs funds are placed in well-known and low-cost institutions Fidelity and L&G. The app is free to use with no monthly fixed charges, just an annual fee that is 0.5% of the account value. There is also no requirement for you to hold a minimum balance or to set up a minimum monthly transfer. Unlike many other Junior ISAs on the market.
Tools Available to Helps with Saving for your children
Beanstalk has some unique and clever tools to help build up your children’s savings.
Top Up and Regular Contributions
Within the tools section you can easily set up one off top ups or regular contributions. You can also send invites to other family members. This is perfect for those who maybe give money gifts at birthday or Christmas. If they accept the invite, they will be linked to the child’s beanstalk account and will be able to contribute as well.
Save whilst you shop
Using the sister service KidStart, you can shop from many online retailers and receive cash back that goes straight into your children’s savings. Click through to KidStart from the Tools page and find your chosen retailer on the KidStart. Buy as normal and you will receive some money back from your purchase. At the time of writing H&M offers 4% back, John Lewis offers 5% on baby and child purchases and Argos offers 1% back.
Another clever function to help with saving is the round up function. You can connect your bank account using open banking technology. You can choose to round up your purchases/direct debits to the nearest say £1 or £10 and save the rounded-up amount between your Beanstalk Accounts.
Reassurance that my Children’s Savings are in the right place
I now feel comfortable that my children’s Junior ISA money is in place where fees are low, and I can access all information about balances and transfers within the simple app.
This is a collaborative post with Beanstalk. As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
Beanstalk is FCA regulated, money and investments are held under FCA client money and custody rules by their authorised investment platform provider. Investments are covered up to £85,000 under the Financial Services Compensation Scheme.