Child Trust Fund - Top Ups

Top-ups make the perfect birthday or Christmas gift, maximising the cash lump sum your child will receive when they turn 18

Child Trust Fund - Top Ups

Frequently Asked Questions

You can find the answers to some commonly asked questions about our Child Trust Fund below. If you have any questions that are not answered here, please contact us.

About the Child Trust Fund

Can I still open a Foresters Friendly Society Child Trust Fund?

We no longer accept Child Trust Fund applications, however we do offer another savings plan which can be used to save for your child’s future - our Child Tax Exempt Savings Plan.

Can I transfer an existing Child Trust Fund into the Foresters Friendly Society Child Trust Fund?

We no longer accept transfers into our Child Trust Fund. 

Why are you no longer selling the Child Trust Fund?

Since the Government's decision to discontinue Child Trust Fund policies after 1 January 2011, and the reduction in the value of the voucher from 1st August 2010, we took the decision to stop offering the Child Trust Fund in order to protect the interests of our existing policyholders.

Is my existing Ethical Child Trust Fund or Teddy Trust Child Trust Fund affected?

No, the policies that have been taken out will not be affected by the closure to new Child Trust Fund applications. All the terms and conditions that apply to the policy will be honoured and we still aim to add annual bonuses to your child's Trust Fund year on year and a possible final bonus when the plan matures on your child's 18th birthday.  The addition of any bonus is not guaranteed.

What other children's savings policies do you have that can be taken out in place of the Child Trust Fund?

We provide a Child Tax Exempt Savings Plan which is only available through Friendly Societies. This is a tax efficient savings plan that allows you to pay regular premiums - between £15 and £25 a month, into the plan for a fixed term. This means that you decide when you want the plan to mature for your child or grandchild (after the child's 16th birthday and subject to a minimum term of 10 years).

Is there any intention to sell on your existing Child Trust Fund policies to another provider?

No, we recognise the importance of having younger generations joining and benefiting from membership to the Society. We currently have no plans to sell the policies on to another provider.

What happens to Child Trust Fund accounts after 2 January 2011?

Children born after 2 January 2011 will not be eligible to open a Child Trust Fund account.

Accounts already set up for eligible children will continue to benefit from tax efficient investment growth and no withdrawals will be possible until the child reaches 18 years old.

The child's friends and family will still be able to contribute up to an overall total of £4,128 a year, and it will still be possible to change the type of account and/or move it to another provider.

If you want to pay in more than £4,128 per year, or your child is not eligible for a Child Trust Fund, our Child Tax Exempt Savings Plan can be taken out to further maximise your child's savings. Child Tax Exempt Savings Plans are only available through Friendly Societies and offer a tax efficient savings plan that allows you to pay regular premiums of between £15 and £25 a month, into the plan for a fixed term. This means that you decide when you want the plan to mature for your child or grandchild (after the child's 16th birthday and subject to a minimum term of 10 years).

Payments and access to the plan

Can I continue to top up my Ethical Child Trust Fund or Teddy Trust Child Trust Fund?

Yes. The plan conditions are currently unchanged which means you can continue to pay in up to £4,128 a year for your child. Top ups can also continue to be made by friends and family.

 

Is there a limit on the amount of top ups?

Yes. The total amount of top ups from all sources must not exceed £4,128 per year. It is the responsibility of the person who opened the Fund to ensure that total contributions do not exceed £4,128 per year.

If you want to pay in more than £4,128 per year, our Child Tax Exempt Savings Plan can be taken out as well as a Child Trust Fund to further maximise the child's savings.


Who can make contributions into the Child Trust Fund?

Family, friends, godparents - and anyone else who wishes to - can contribute to the Child Trust Fund. For example, as a birthday or Christmas gift for the child.

How will the government make the extra payment at my child's seventh birthday?

Government contributions at age 7 have stopped for children whose 7th birthday falls after 31 July 2010.

For more information on the Government contributions, please visit the Child Trust Fund section of the Government's website. 

Can my child access the money in their Child Trust Fund before they reach 18?

No. The Child Trust Fund is designed to offer a financial head start when the child becomes an adult by providing a cash payment when they turn 18 years old. Under the Government changes, this will remain the same - no withdrawals will be permitted until the child turns 18.

Can I have access to the money?

No. All the money in the Child Trust Fund belongs to your child and is locked in until they reach 18.

Do I have control over the money?

Until your child reaches 16 you control the investments held in the Child Trust Fund. From 16, your child can control the Child Trust Fund if they wish to.

Are there any restrictions on how the money can be spent?

No. The money belongs to your child and at 18 they are entitled to spend it how they wish.

Returns on the plan

How does the Child Trust Fund have the potential for growth?

Your Child Trust Fund voucher and any additional contributions made are invested in Foresters Friendly Society's with profits Order Insurance Fund, with the Ethical Child Trust Fund only being invested in the ethical section of this Fund, which provides your child's plan with the potential for growth by way of bonuses rather than interest payments. 

Annual bonuses and a final bonus may be added to the value of the Child Trust Fund depending on the future investment performance and deductions of the with profits Order Insurance Fund and how we decide to distribute any profit. The addition of bonuses is not guaranteed and it is possible that the Child Trust Fund might not receive any annual and/or final bonus.

Where is the money invested?

Any money paid into the Child Trust Fund is invested in Foresters Friendly Society's with profits Order Insurance Fund, with the Ethical Child Trust Fund only being invested in the ethical section of this Fund. Here, we manage your money, alongside other investors' money. We spread all the money paid into the fund across a number of different types of assets that may include property, UK government bonds, equities and cash. If the return from any one particular asset type is poor, the investment may be protected from the full impact of this fall as other assets forming part of the overall investment may perform better.

What interest does the Child Trust Fund have?

The Child Trust Fund does not pay interest. Instead, the with profits Order Insurance Fund provides your plan with the potential for growth, by way of bonuses.

How do bonuses work?

At the end of each year, we aim to declare an annual bonus, based on how the fund performs and the costs incurred. In addition, when the Child Trust Fund matures, we may add a final bonus based on the overall investment growth achieved and expenses incurred.

This is different from a Bank or Building Society account where interest is added, because any growth on the investment with Foresters depends on the performance of the underlying fund. 

Although in some investment conditions the growth in the Child Trust Fund might not be as much as that on an interest-paying account, investing in this way means there is the potential for growth over and above the level which might be achieved on interest-paying accounts.

The addition of bonuses is not guaranteed and therefore it is possible that your Child Trust Fund might not receive any annual and/or final bonus.

Tax and the plan

What about tax?

One of the best things about this plan is that the payment your child receives is free of Capital Gains Tax and Income Tax, so there's even more money for your child.  Like NISAs the tax is automatically deducted from UK share dividends.

Please be aware that tax rules might change and depend on individual circumstances.

Would a child really be paying tax on an account?

It's worth bearing in mind when looking at savings options that a young adult may be earning and paying tax when the Child Trust Fund matures at age 18. The Child Trust Fund ensures that the child is exempt from tax on the lump sum pay-out.

There's a common myth that children don't pay tax - that's simply not true. In fact, children are taxed in the same way as adults. Each child can, in the 2017/2018 tax year, benefit from up to £11,500 tax-free income and, depending on the total taxable income, up to £1,000 in tax-free savings income.

Most children don't use up their allowance, so their savings interest is tax-free. But there's also the proviso that any interest earned on money specifically given to them by a parent is only tax-free up to £100 interest a year, per parent or step-parent, beyond which all interest is taxed at the parent's rate.  Please be aware that tax rules might change and depend on individual circumstances.

About Foresters Friendly Society

Who is Foresters Friendly Society?

Foresters Friendly are a mutual society, founded in 1834 by ordinary people with a common purpose - to support each other through financial and other difficulties.

We've been looking after our members, and their finances, for over 180 years, offering care and protection through relevant affordable financial products. 

Since 1834 our aim has been to be open, approachable, honest and fair, treating all our members as individuals.

We always put the interests of our members first.

How safe is my child's money?

You'll be pleased to hear that our funds have grown steadily over the years and our financial position remains strong. (Source: Reports & Accounts 2016). However, note that past performance is not a guide to the future.

However, if in the unlikely event that Foresters Friendly Society were to be declared insolvent, you would be able to make a claim under the Financial Services Compensation Scheme.

About Friendly Societies

What is a Friendly Society?

Friendly Societies have been around for hundreds of years. They were founded on the idea of mutuality - that if a group of people contributed to a mutual fund, an individual within the group could benefit in a time of need. The principles still apply - friendly societies are owned by, and operate in the interests of, their members. Unlike public limited companies, they use revenues to the benefit of their members rather than distributing profits to their shareholders.

How do Mutuals perform, compared to PLCs?

With no shareholders to answer to, mutual societies can ensure their profits are only used for their members’ benefits by sharing this amongst members, or re-investing to provide potentially better returns, better value or higher levels of service.

Over the last 10 years, the average mutual with-profits policy produced 29% more than an equivalent from a PLC insurer – that’s around £11,400 more after 25 years for a £50 per month policy.

(Source: Association of Financial Mutuals:  AFM Key facts about mutual insurers and friendly societies November 2014)

What is a Mutual?

UK financial organisations are either authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) and can be regulated by one or both regulators, and are either mutuals or public limited companies (PLCs). Unlike a PLC, a mutual organisation has no external shareholders to pay in the form of dividends and does not seek to make large profits or capital growth.

Mutual organisations are owned and run for the benefit of their members and their profits are usually re-invested for the benefit of members, although some may be used for internal finance to ensure the mutual is sustainable, safe and secure.

Today, UK mutuals account for over £116 billion in revenue every year and 1 in 3 people in the UK are a member of at least one mutual. (Source: The Mid-Term Mutuals Manifesto 2013 and the Mutual 2013 Yearbook)

Membership and Extras

I read somewhere about benefits - but I imagine I pay for those somewhere?

When you take out one of our policies or plans, you automatically become a member of Foresters. As a mutual, we don't have to answer to external shareholders. Instead, we use all our profits to benefit our members. All Foresters customers can take advantage of Foresters Extras, a range of benefits we offer at no additional cost.

Do I get any additional benefits as a Foresters customer?

All our customers benefit from Foresters Extras, a range of benefits we offer at no additional cost.

Help and support

Where can I get help?

For help and support, please contact Foresters Friendly Society.

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