FIDELITY CONFIRMS COMMITMENT TO LAUNCH JUNIOR ISA
Rob Fisher, Head of Personal Investments Fidelity International said: “Fidelity International can confirm that it will be offering the Junior ISA from 1st November 2011. Fidelity customers will be able to invest their annual allowance (expected to be £3,600) in Fidelity’s wide range of funds and investment trusts, as well as access a wide choice of some 1, 200 funds from the other 70 fund companies on our fund supermarket. Our fund supermarket will enable investors to select funds from multiple providers for their Junior ISA rather than being restricted to one should they choose to invest directly with a fund provider.
“With the increased focus on the individual to provide for themselves, rather than rely on the state or employer, the Junior ISA has the ability to teach an important lesson to young people early in their life. The earlier they start saving, the earlier they can benefit from the compounding of their assets and the long term performance of the stockmarket. It will also help focus adults to save and invest on behalf of their children for university, first home deposits in addition to encouraging the discipline of saving.”
Facts and figures
- If the full Junior ISA allowance was invested every year from birth until the age of 18 with an assumed growth rate of 5% and the allowance was adjusted for an inflation rate of 2.5% the total ISA would be worth £101,336.52. If the money is left invested in the ISA until the child is 21 it would grow to £163,064.60*
- Young people often have the greatest opportunity to benefit from the long-term performance of stock markets and the Junior ISA will allow them to do so tax efficient. We have calculated that an investment of £100 per month in the Fidelity MoneyBuilder Growth Fund over the last 15 years would be worth £28,666.03 today in a Junior ISA wrapper or £100 per month in Fidelity Special Situations would be worth £43,055.61**.
Q & As
- What is a Junior ISA?
The Junior ISA is a new tax efficient savings account designed for adults to save and invest on behalf of children.
- What are the main features of the Junior ISA?
Junior ISAs will be available to all children who missed out on the Child Trust Fund. It is a tax efficient savings vehicle similar to an adult ISA. Parents, family and friends can contribute up to £3,600 a year on behalf of a child. The money invested in a Junior ISA is locked away for the child who can withdraw the proceeds when they reach 18.
- Who is eligible for a Junior ISA?
Junior ISAs will be available to all children who missed out on the Child Trust Fund.
Any child resident in the UK who was either:
Ø born on or after 3 January 2011
Ø born before September 2002 and is under 18
- plus anyone born between these dates that does not already have a Child Trust Fund
Please note – If you have a Child Trust Fund you cannot currently invest in a Junior ISA for the same child
- When will the Junior ISA be available?
The launch date is 1st November 2011.
- Can I apply for a Junior ISA now?
Not at the moment. Further information will be available to investors closer to the time.
- Can I access the money held in a Junior ISA?
No you cannot access the money held in a Junior ISA. Like a Child Trust Fund, the account is set up for the child and only they can access the money when they reach 18 years. Exceptions being terminal illness or death of the child.
- Can I take out a new Junior ISA with a different provider, each tax year?
No. Unlike an adult ISA where you can take out a new ISA with a new provider each tax year, all the money in your Junior ISA is kept with one provider (though you can transfer the funds to another provider at any time if you wish).However, if you choose to hold your Junior ISA with a provider like Fidelity which has a fund supermarket, you will be able to invest in funds from multiple providers within the ISA, removing the need to move elsewhere should you wish to change your investments from ie M&G to Invesco.
- Why aren’t children in CTFs eligible?
At present only children that don’t have a Child Trust Fund will be eligible for a Junior ISA otherwise they will enjoy double tax-free savings allowances. Children only received CTF vouchers if they were registered for child benefit, if they weren’t registered they wouldn’t have received a CTF voucher, if they don’t have a CTF voucher then they are eligible for Junior ISA. The Government may decide to merge Child Trust Funds and Junior ISA products in the future.
About the author: George Pardew is the head of personal investments at Fidelity International
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