A guide to
Junior ISAs
Give your child that
financial boost when
they reach adulthood
What What
you will
is a
find inJunior
our ISA
guide
We all want our children to have the best possible
start in life and a lump sum will open up choices and
opportunities for them. Our handy guide provides
you with a simple and quick overview of Junior ISAs
to help you decide whether this savings product is
suitable for your child.
Forester Life is part of the international financial
services organisation, Foresters Financial, which has a
history of over 140 years and now looks after 3 million
customers and members across the UK, Canada and
the United States.
What’s included
1 What is a Junior ISA?
2
3
4
5
6
7
8
9
What does tax-efficient mean?
Why open a Junior ISA?
Who can have a Junior ISA?
Who can open a Junior ISA?
What does the Registered Contact do?
How much can be saved in Junior ISA?
What types of Junior ISAs are there?
Can I transfer?
And You will also find details of our Junior ISA and a
jargon buster to explain Junior ISA terminology.
At Foresters Financial we believe in doing more for you, your family and your community
1
What is
a
What is a
JuniorJunior
ISA?ISA
A Junior ISA is a tax-efficient savings initiative designed to
allow adults to save on behalf of a child, introduced by the
Government in November 2011.
Any money paid into a Junior ISA belongs to the child which
they will gain access to at age 18. If they don’t need the
money it will automatically roll into an Adult ISA, so your
child can save for longer.
2
What does
What is a
tax-efficient
Junior ISA
mean?
Tax-efficient means the amount paid to the child at age 18 is
free from Income and Capital Gains Tax.
Tax treatment depends on individual circumstances and may
be subject to change in the future.
3
Why open a
Junior ISA?
We can’t predict what children want to be when they are
older, but one thing is for sure a lump sum can open up a
range of opportunities - from helping with university costs,
paying for their first car, or towards a deposit on a house.
Imagine their reaction when they’re given the good news.
4
Who can
have a
Junior ISA?
All children under age 18 and resident in the UK can have a
Junior ISA.
If your child was born between 1st September 2002 and
2nd January 2011 they may have a Child Trust Fund (CTF).
You can transfer a CTF to a Junior ISA, but a child cannot
have both.
5
Who can
open a
Junior ISA?
If you have parental responsibility for a child, who is under
18, you can open a Junior ISA on their behalf. You will then
become the Registered Contact.
Alternatively children who are aged 16 or 17 can open and
manage their own Junior ISA if they wish to do so.
6
What does the
Registered
Contact do?
The Registered Contact is responsible for managing the
Junior ISA and is the only person who can change the
account details or provider.
When your child reaches age 16 they can then choose to
manage their own Junior ISA.
7
How much can
be saved in a
Junior ISA?
You, your family and friends can save up to £4,080 this
tax year into a Junior ISA. This limit is decided by the
Government.
You can invest the full amount in a Stocks and Shares or a
Cash Junior ISA. Or your limit can be split between a Cash
and a Stocks and Shares Junior ISA, as long as the total
contribution does not exceed the yearly limit.
8
What types of
Junior ISAs are
there?
There are two types of Junior ISAs that you can open - Cash
or a Stocks and Shares Junior ISA. We offer a Stocks and
Shares Junior ISA.
You can decide to have one or the other, or both, your
decision depends on your risk appetite.
Stocks and Shares Junior ISA Cash Junior ISA invests in the stock market
generally offered by banks and
building societies
Pros:
Pros:
The aim of better growth in the longterm than cash.
Guaranteed return on an advertised
interest rate.
Cons:
Cons:
It can be confusing with the vast choice
on where to invest your funds. Our
Junior ISA is professionally managed for
you.
There will be a charge, so it’s important
to shop around as this may eat up
some of the gains. We have no charges
for the first year and only a 1% annual
management charge thereafter, there
are no other charges.
Currently, interest rates are low.
Risks:
Risks:
The value of your investment can fall as
well as rise and you may get back less
than you paid in.
Your investment may not keep up with
inflation so you might not have as much
buying power in the future.
Top ‘headline’ rates may only be
introductory and be reduced after a
certain period. They may also have
conditions attached, such as moving
your current account to the provider
or requiring you to take out additional
products.
9
Can I transfer?
You can transfer a Junior ISA to another Junior ISA provider,
and you can transfer from cash to stocks and shares, and
vice versa.
You can also transfer from a Child Trust Fund to a Junior
ISA, however once you have transferred you cannot transfer
back.
1
to
9
Summary
1
A Junior ISA is a savings product for adults to
save on behalf of a child.
2
A Junior ISA is a tax-efficient saving and can
roll into an Adult ISA.
3
Can open up a range of opportunities for their
future.
4
All children under 18 and resident in the UK are
eligible for a Junior ISA.
5
Anyone with parental responsibility and
children aged 16 and 17 can open a Junior ISA.
6
The Registered Contact is responsible for the
Junior ISA.
7
You can invest up to £4,080 a year - and family
and friends can contribute too.
8
There are two types of Junior ISAs available cash and stocks and shares.
9
You can transfer a Junior ISA to another Junior
ISA provider and you can transfer a Child Trust
Fund to a Junior ISA.
Introducing
our Junior ISA
We offer a Stocks and Shares Junior ISA which is professionally
managed by Schroders, and has no charges for the first year
and only a 1% annual management thereafter. There are no
other charges.
Your money will be invested in a risk-controlled fund, which is
made up of a mix of shares, gilts and bonds. No more than 60%
of your investment will be in shares, therefore protecting your
child’s investment against the sharp falls of the stock market,
and ensuring that they will benefit if the market rises.
Our Junior
ISA continued
and contact us
Whilst investing in stocks and shares may be a higher risk
than saving in cash it offers the potential for better returns,
especially over a longer period of time, such as the life of a
Junior ISA.
Whilst past performance is not a guarantee of future
performance, Barclays Gilt Equity Study 2016 shows that an
investment over 18 years into equities is likely to outperform
a cash investment 99% of the time based on annualised real
returns analysed since 1899.
You can start investing with us for your child from as little as
£10 a month and you can apply and manage the account all
online.
Find out more about our Junior ISA >
Thinking about transferring to us >
The value of your investment can fall as well as rise and you
may get back less than paid in.
Foresters
simplifying
Junior ISA
Jargon
We’ve put together a brief jargon buster to help explain some of the terminology
used with Junior ISAs.
A
C
Allowance
Sometimes referred to as ‘limit’,
the Junior ISA allowance is the
maximum amount that can be saved
each tax year (from April to April).
The Government is responsible for
setting the allowance.
Cash Junior ISA
A Government tax-efficient savings
initiative designed to allow adults
to save on behalf of a child in a
deposit based account.
Annual management charge (AMC)
Is the annual charge that covers the
running and management of the
fund. Some companies may have
other additional charges.
B
Bonds
A debt invested in which an
investor loans money to either the
Government or a Corporation,
which borrows the funds for a
defined period of time at a variable
or fixed interest rate.
Child Trust Fund
A Government scheme to support
long-term children’s savings. It was
given to children born between
1st September 2002 - 2nd January
2011 and who were eligible. The
money is locked away until the child
turns 18.
CTF
CTF is the abbreviation of ‘Child
Trust Fund’.
Contribution
Any money which is added to an
account.
E
I
Encashment
Your child at age 18 may withdraw
some or all of their investment from
their Junior ISA, this is often known
as encashment.
Interest
The income you are paid on any
savings that in your account.
Remember, no funds can be
withdrawn from a Junior ISA until
the child is 18, except in exceptional
circumstances.
F
Financial Conduct Authority
Also known as the FCA, is a financial
services regulatory body in the UK,
which regulates the conduct of
financial businesses.
Financial Services Compensation
Scheme
Also known as the FSCS, the UK’s
statutory compensation scheme
for the financial services industry.
It can pay out to customers of an
authorised firm should it fail.
FTSE*
Stands for Financial Times Stock
Exchange and is the common
name for a set of British stock
market indices that show how well
companies listed on the London
Stock Exchange are performing.
FTSE 100 Index*
Includes the 100 most highly
capitalised/blue chip companies
listed on the London Stock
Exchange.
* “FTSE” is a trade mark of the London Stock
Exchange plc and The Financial Times Limited
and is used by FTSE International Limited (‘FTSE’)
under licence.
ISA
An Individual Savings Account is a
tax-efficient savings account for
yourself.
J
Junior ISA
A tax-efficient savings initiative
designed to allow adults to save on
behalf of a child, introduced by the
Government.
JISA
Some companies may use this as
an abbreviation for a ‘Junior
Individual Savings Account’.
K
Key Features
A document describing the
essential features of a financial
product, designed to allow a
customer to make an informed
decision about whether or not to
buy or invest in a product.
KID
A KID is a Key Information
Document. From December
31st 2016, it will replace the Key
Features document and provide
important information about an
investment product.
KIID
A KIID is a Key Investor Information
Document, which provides
important information about a fund.
M
Maturity
When the savings term of a plan
comes to an end. For a Junior ISA
this is when the child turns 18.
P
Parental responsibility
Parent or legal guardian of a child,
and therefore can open a Junior
ISA.
Planholder
This is the person who’s plan is it. In
the case of a Junior ISA this is the
child.
Prudential Regulation Authority
Also known as the PRA, is a financial
regulatory body in the UK, which
regulates the financial running of
large financial services companies.
R
Registered Contact
The Registered Contact is the only
person who can make decisions
regarding the management of the
Junior ISA (until the child reaches
age 18 or at age 16 if they decided
to take responsibility at that time).
S
Statement
Details all transactions on your
account. This is usually sent
annually, and can be referred to as
an annual statement.
Stocks and Shares Junior ISA
A Government tax-efficient savings
initiative designed to allow adults
to save on behalf of a child which is
invested in the stock market.
T
Tax-efficient
Means the amount saved or paid
out is free from Income and
Capital Gains Tax.
Tax year
The year during one’s taxable
income is considered. This is from
6th April one year until 5th April
the following year.
Transfer
Where you move money from one
account to another. For a Junior
ISA you can transfer to another
provider, of transfer a CTF to a
Junior ISA.
Registered Office: Forester Life Ltd, Foresters House, 2 Cromwell Avenue, Bromley BR2 9BF.
T 0333 600 0333. E [email protected].
Forester Life Ltd is registered in England number 2997655. Forester Life Limited is authorised by
the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority. foresters.com DAC2016153 (03/17)