56pc of parents unaware of Junior ISA

The Momentum UK Team 30 October 2012

More than half of parents in the UK who have young children are unaware of Junior ISAs as the product approaches its one year anniversary, according to a report by Family Investments.

The report suggests that 56% of parents with children under the age of 18 have never heard of the Junior Individual Savings Account (ISA) product which can provide a tax free long term saving or investment option for eligible children.

Awareness levels in low income families was lower still at just 32% in households with an income of less than £28,000.

With 92% of parents surveyed saying that they thought it was important to save for their children, the figures could suggest that parents are simply not aware of options that could be available to them.

The Junior ISA product was introduced to the market in November 2011, to provide an alternative to the Child Trust Fund option which had become unavailable to new applicants earlier in the year.

Junior ISAs are available to children living in the UK who are under the age of 18 and do not already have a Child Trust Fund set up in their name.

Parents, family and friends can put up to £3,600 per tax year into a cash Junior ISA or a stocks and shares Junior ISA or a combination of the two on behalf of a child. The money then belongs to the child and can normally only be accessed by them when they reach the age of 18.

72,000 Junior ISAs were sold in the five months following the launch of the product.

Kate Moore, Head of Savings and Investments at Family Investments said:

"At the launch of the Junior ISA it was a stated aim of the government to encourage greater savings across society. To achieve this we need to encourage those who do not currently save to get into the habit of doing so, i.e. those on lower incomes.

"Young adults today face very significant financial costs such as university tuition fees and deposits for a first home. If the current situation with children's savings is not addressed then the government is unlikely to achieve its objectives.

"Both the government and savings industry need to act now to ensure the success of the product. Activity to raise awareness should be complemented by engaging with providers and listening to what parents want from the product when it comes to issues like affordability and parental control."