How will the Child Trust Fund grow?
The Child Trust Fund does not pay interest on the amount you have paid in. Instead, the with profits Order Insurance Fund provides your child's plan with the potential for growth, by way of bonuses.
What are bonuses?
Any money paid into the Teddy Trust Child Trust Fund is invested in our with profits Order Insurance Fund. The Ethical Child Trust Fund only invests in the ethical section of the with profits Order Insurance fund. Dependent on the performance of these funds, Foresters Friendly aim to add annual bonuses to increase the value of your child's Trust Fund.
When the time comes and the Child Trust Fund matures, we also aim to add a final bonus to the value of the plan. This is done to ensure that the plan's payout reflects your fair share of the Order Insurance Fund.
In adverse market conditions, a Market Value Reduction (MVR) could be applied if you transfer your child's Trust Fund to another provider meaning that the amount your child receives will be reduced. However, the transfer value will not be less than the total of all contributions paid. We will only do this to ensure fairness between policyholders leaving the fund at different times. We will never apply an MVR in the event of death or when the policy matures at age 18.
The addition of any bonuses is not guaranteed.
How do bonuses work?
We aim to pay bonuses in two ways:
We aim to pay annual bonuses on the amount you have paid into the Child Trust Fund as well as on any previously declared bonuses.
- Final bonus on maturity of the Trust Fund
When the child reaches 18 and their Trust Fund matures, we also aim to add a final bonus to the total value of your child's plan.
The following annual bonus rates have been declared for the Child Trust Fund:
||Annual Bonus Rates
The annual bonus rate is applied to the amount you have invested in your Child Trust Fund to date plus any previous bonuses that have been added.
The addition of any bonus is not guaranteed and you may not get back the full amount of the bonuses added, dependent on the investment conditions at transfer. To find out more about the addition of bonuses and how we manage our fund please read our Principles and Practices of Financial Management (PPFM).
We may vary the design of a product to best meet the needs of our policyholders which may affect the timing and size of future bonuses. Therefore the above table is provided for information purposes only and should not be considered an indication of likely future performance.
The Child Trust Fund is classified as a 'Medium Risk'. This is suitable for medium risk investors, who can be classified as follows:
- You are willing to take a moderate amount of risk.
- You understand and accept that inflation could erode the value of your money over time.
- You understand that you could lose money on a 'Medium Risk' investment.
- You understand that Foresters Friendly Society regard a 'Medium Risk' product to be one which typically cannot predict the amount of money you may receive back.
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