Child Trust Fund
Key Features & Terms & Conditions
The Financial Services Authority is the independent financial services regulator. It requires us, Monmouthshire Building Society, to give you this important information to help you decide whether our Child Trust Fund is right for you. You should read this page carefully so that you understand what you are buying.
What is the purpose of this page?
The purpose of this Key Features page is to describe the key features of our Child Trust Fund product and provide a balanced summary, so that you can make an informed and confident choice about how to save.
Monmouthshire Building Society Child Trust Fund
The Aims
• To provide a simple method for investing payments for a child from the Government under the Child Trust Fund (CTF) scheme.
• To build up a lump sum that will provide a return on payments when the child reaches 18.
• To increase the value of the account in a tax efficient way for the benefit of the child.
Your Commitment
• A Child Trust Fund account can only be opened by using a valid CTF voucher issued by the Government.
• You are not obliged to make any further payments into the account. However, you can deposit a maximum additional investment of up to £3,600 per year into the account, on top of what the Government pays in.
• To appoint us as the child’s account provider and authorise us to manage the account in line with current and future government rules connected to the account.
• To leave all money in the account until the child reaches their 18th birthday. The money cannot be accessed before this time (unless the child becomes terminally ill or dies), although it can be transferred to another Child Trust Fund provider.
• Any contributions made to the Child Trust Fund cannot be returned to the payee.
• To make any decisions regarding the account on behalf of the child until they reach 16 years of age.
Risk Factors
• The Government may change or withdraw the favourable tax advantages of the Child Trust Fund account at any time, and this may reduce the potential growth of the investment.
• Any further payments paid into the child’s account are considered as a gift to the child and cannot be withdrawn until the child reaches age 18.
Your Questions Answered
What is a Child Trust Fund?
The Child Trust Fund (CTF) is a Government initiative to help you save for a child's future. Currently any child born on or after the 1 September 2002, who is eligible for child benefit, will receive a voucher. Additional savings can also be paid into the account each year, to a maximum of £3,600. All money paid in, along with any interest earned, may not be withdrawn until the child is 18.
However, please note that the Government has announced that it intends to reduce and then stop Government payments to Child Trust Fund accounts. Any child born from 1st January 2011 onwards will not be eligible for a Child Trust Fund.
Who can open a Child Trust Fund?
A Child Trust Fund can only be applied for on behalf of a child by an individual who is aged 16 or over with parental responsibility. This individual will become the ‘Registered Contact’ and is authorised to operate the account until the child turns 16. At 16, the child is responsible for the management of their CTF and the Registered Contact’s authority to operate the account ceases to exist.
What types of Child Trust Fund are there?
There are two types of Child Trust Funds available:
• Cash Child Trust Fund
• Stakeholder Child Trust Fund
| Cash Child Trust Fund (non-stakeholder) Monmouthshire Building Society | Stakeholder Child Trust Fund |
| Investment is made in a savings account that earns interest | Investment linked to stock market performance |
| Designed to last for up to 18 years, but can be transferred to another provider without penalty | Designed to last for up to 18 years, but can be transferred to another provider without penalty |
| Capital secure for the lifetime of the account | At age 13 money starts to be moved to less risky investments, however performance is not guaranteed and the account's value may be less than was invested |
| No charges are applied on this account | Maximum charge is 1.5% of the account's value each year |
| Minimum additional contribution £1 | Minimum additional contribution up to £10 |
What type of Child Trust Fund does the Monmouthshire Building Society offer?
The Monmouthshire Building Society only offer a Cash Child Trust Fund, which is a 'non-stakeholder' Child Trust Fund, which means that it is a 'cash' savings account. The money that is put in attracts a healthy rate of interest and bonus payments where applicable, which then steadily accumulates until your child reaches the age of 18.
What is a stakeholder CTF account?
With this kind of Child Trust Fund, a child's savings are invested in a stock market based investment fund. This invests in stocks and shares until your child reaches 13 years of age. Between your child's 13th and 18th birthdays, unless otherwise instructed, the investment is gradually moved into 'safer' investments like cash or Government stock. This type of CTF may offer greater returns than a 'cash' based account, but the value may fall as well as rise, charges may be payable, and you may get back less than was paid in.
Monmouthshire Building Society have chosen to work with Engage Mutual Assurance to offer you a stakeholder CTF account because it is one of the UK's leading friendly societies. Engage Mutual Assurance will make all the arrangements on your behalf and you will deal directly with them. The Society is unable to process any additional contributions you may wish to make to a stakeholder Child Trust Fund.
If you would like to find out more about a stakeholder Child Trust Fund, please ask at the counter for an information pack, or telephone us on 01633 844400 and we will post it to you.
Where can I find out more about Child Trust Funds?
The Government has provided various general information sources to help you make the right choice.
• More information can be found at: www.childtrustfund.gov.uk
• Call the Child Trust Fund helpline on: 0845 302 1470
• Write to: Child Trust Fund Office, Waterview Park, Mandarin Way, Washington, NE38 8QG
• Email: childtrustfundoffice@ir.gsi.gov.uk
