Parents may be able to move cash from a Child Trust Fund (CTF) into a junior Isa (JISA) in future, the Government has announced in today's Budget.
The Government says it will consult on the options for transferring savings held in both cash and stocks and shares CTFs into the equivalent junior Isas, as it "wants to support parents by ensuring that there continues to be a clear and simple way to save for all children".
The move comes after the Government said last March it wouldn't allow parents to convert CTFs into junior Isas (see the Government dashes CTF/junior Isa merger hopes MSE News story).
The 12-week consultation, which begins at Easter, will be welcomed by parents who have long called for the Government to allow the two products to be merged due to concerns that CTF providers have no incentive to offer good deals (see our CTF guide for the top rates).
Only children born on or after 3 January 2011 or before September 2002 are eligible for a junior Isa. But money in a CTF can't be transferred into a junior Isa at present (see our Junior Isa guide for more).
CTFs typically have poorer interest rates on regular savings products compared with junior Isas.
The results of the consultation are expected to be announced by summer.
What are Child Trust Funds?
CTFs are tax-free savings accounts available for kids born between 1 September 2002 and 2 January 2011.
Parents got up to £500 (though most were £250) when their child was born to put into the account, and again on their seventh birthday, but these payments stopped at the end of 2010.
Once money is put into a CTF, it can't be withdrawn until the child's 18th birthday. However, the money can be transferred to another CTF account.