Child Trust Fund Voucher

Save with us for a Smooth steady growth

Children grow so quickly which means it is essential to start thinking about saving when they’re young. By saving from just £10 to £25 a month with Scottish Friendly’s Child Bond in their early years you could help them when they are older.  Situations where this might prove useful might include helping to pay for university fees or making a payment to secure a new car.

You can save tax-free for any child with a Scottish Friendly Child Bond. It’s tax-free since it’s a friendly society savings plan, which means that under current financial legislation it grows free of income or capital gains tax. There can be no doubting that it is a great way for parents, grandparents, family members and friends to make a huge financial difference when the little ones are older.

To sum up the Child Bond is a with-profits investment plan: It invests for long-term growth as well as a certain degree of security, in stocks and shares, fixed interest funds and cash. The invested amount accrues through the addition of potential yearly bonuses and at the specified time the bond becomes payable there is a tax-free payout. The value of bonuses depends on how much profit we make and how it is distributed by us. It must be realised that bonuses are not guaranteed.

The Child Bond can last for a minimum of ten years, but you are able to invest for longer if you like - perhaps to coincide with an 18th or 21st birthday. You can save either monthly, annually or with a lump sum payment. It really is completely up to you. It should be borne in mind that if the plan is cashed in prior to the end of the term, the amount the child will get back may be less than the amount paid in. If you elect the monthly option, you can get started by saving from as little as £10 a month - up to a maximum of £25 a month. Or you can make once a year payments of up to £270 a year.

You can also make the payment of all of the premiums in one go through our lump sum funding plan. If you invest the maximum sum of £2,340 for a 10 year period, this actually invests £270 a year into the Child Bond. The minimum lump sum of £1,040 will yield £120 a year for 10 years - a total of £1,200. This provides a way for you to take care of all your premiums in one go and is something that is popular with grandparents who like the reassurance of knowing all premiums for the entire term of the plan are taken care of. This particular plan has life cover included with it so you should consider if this is suitable for your financial needs.

What the Child Trust Fund can do for your son or daughter

Do you know what the Child Trust Fund is? Only a small number of parents seem to know about the fact that all newborn children get a free £250 voucher from the the State to place in a Child Trust Fund. This voucher may be invested in any one of three types of CTF account, Stakeholder - a shares-based account that switches into cash, a savings account or a shares account. It is a great opportunity to save for the future life of a child. Scottish Friendly is an approved provider of the Child Trust Fund Voucher. The State is eager for the public to have access to Stakeholder accounts and this is the sort of account that we provide. This means that:

• Investments go into Scottish Friendly’s Managed Growth Fund, which hopes to provide good growth potential • It invests in part in shares to take advantage of potentially higher returns over 18 years, compared to a cash deposit account (although the value of shares can go down as well as increase whereas capital would be protected in a deposit account)

• It is available with a low ‘Stakeholder’ funds charge of just 1.5% per year

• When attaining the age of 18 the child will get a lump sum, wholly free of Capital Gains and Income Tax under current legislation

• It’s affordable - extra payments can be put in the account from only £10.

One of the great attractions of the Child Trust Fund is that anyone - parents, grandparents, aunts and uncles, friends - if they want can give to the Fund to an uppermost limit of £1,200 per year to help increase the child’s Fund (once added, this money cannot be withdrawn).

All this means our Stakeholder account provides a good balance between possible high returns and a lower level of risk. There’s also the additional assurance that our account meets with the Government’s stakeholder criteria. Nevertheless this does not mean that returns are assured or that Stakeholder accounts are suitable for everyone. Remember that the value of shares in the Managed Growth Fund (where your Child Trust Fund money is invested) can decrease as well as rise and isn’t guaranteed. Only children born on or after 1st September 2002 are allowed to start up a Child Trust Fund.

If you have older kids who are not eligible you could think about saving for them with a Child Bond - it’s a tax-free savings plan intended for long-term growth. There can be no doubt that investing for your children is a rewarding means of preparing for hard times that may lie ahead.