Family sitting with dog on bench who have a Stakeholder Junior ISA for daughter

 

What is a Stakeholder Junior ISA? Before understanding what this means, we need to get to grips with Stakeholder products as a whole.

Stakeholder schemes were introduced by the Government in April 2001 for Pensions and in 2005 for children’s savings products. The aim of a Stakeholder product is to offer customers a straightforward, low-cost and risk-controlled approach with minimum standards for savings and investment.

 

What is a Junior ISA?

Junior ISAs are long-term savings account to save on behalf of a child, or for a child from age 16 to open their own Junior ISA.

These savings Plans were introduced by the Government in 2011 and can only be accessed when the child turns 18. When the money becomes available to the child at age 18, it can be used for any purpose they like, perhaps towards a first home, university costs, a gap year, a rainy day and much more. Learn more about the costs of some of our biggest milestones >

Family and friends have the opportunity to gift money into the Junior ISA. The current annual contribution allowance is £9,000 this tax year.

There are two types of Junior ISAs – Cash Junior ISAs and Stocks and Shares Junior ISAs. You are able to open both types of Junior ISAs for a child if you wish. Find out more about the differences between Cash and Stocks and Shares Junior ISAs > 

At age 18 a Junior ISA will automatically roll into an Adult ISA, where the child will have a number of options for what they would like to do with their money.

 

What is a Stakeholder Junior ISA?

A Stakeholder Junior ISA is a type of Stocks and Shares Junior ISA which complies with standards set by the Government for features such as minimum contributions, maximum charges and how contributions are invested. Stakeholder rules aim to make investment affordable for families to save on behalf of a child.

Stakeholder Junior ISAs offer low minimum contribution limits. Charges are capped at 1.5% and the investment should be risk controlled.

 

Our Forester Life Junior ISA is a Stakeholder Junior ISA. All these details can be found in the Junior ISA Brochure, Terms & Conditions and Key Information Document (KID).

 

What is a Non-Stakeholder Junior ISA?

A Non-Stakeholder Junior ISA does not have to comply with these rules, which means they can insist on higher minimum contribution limits, for example £500 for a single payment – and there may even be more rigid flexible contribution limits, but remember this is all dependant on the provider. They also do not have to follow a risk-controlled approach to investing nor are the charges capped. If you currently have a Non-Stakeholder Junior ISA and wish to transfer to our Junior ISA, find out more about transferring to us > 

 

So, what is the difference?

Comparing them side by side, the table below provides common differences between a Stakeholder and Non-Stakeholder Junior ISA.

 

Criteria

Stakeholder Junior ISA

Non-Stakeholder Junior ISA

Payments

Minimum contributions

 £10 (for both monthly and single contributions).  Minimum dependant on provider.

Making a contribution

Must accept contributions by Direct Debit, direct from your bank and cheque. Provider can decide how contributions are made.
Investing

Where the Junior ISA invests

To provide a risk-controlled approach to investing, the Junior ISA must invest in a fund with a diverse range of assets which must include shares, limited to no more than 60% of the total investment. No requirement for diversification of assets. It can be invested in cash, shares, bonds and so on.
Charges

Annual management charge

Capped at no more than 1.5% per year and deducted by the method specified in the rules. No further charges permitted. Charges decided by the provider. May make additional charges to fund and platform charges.

Entry charge

No charge permitted. Provider able to make charges when investment made.

Exit charge

No charge permitted. Provider able to make charges for withdrawals and encashments.

 

Generally, if you are looking to save for more than 5 years, you have more potential for greater returns when you invest into a stock market type of plan. Of course, stocks and shares can go up and down and you could get back less than you put in.

Saving into Stakeholder Junior ISAs could be an affordable option for parents or guardians to save on behalf of a child. With low charges and low minimum contributions for the Plan, families could make their savings grow further in a Stakeholder Junior ISA.

If you have further queries about Junior ISAs, please read our FAQs page or Guide to Junior ISAs article for more information.

You can also discuss your options through video or face-to-face appointments with a Forester Life Financial Adviser. If you're ready to give your child an exciting start to adulthood, open a Junior ISA online today. You can also transfer to our Junior ISA online here >

 

As with all stock market investments, the value of the Plan go fall as well as rise, and you may get back less than has been paid in.

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