Junior ISAs a miserable failure – but who’s to blame?

The government’s plan to replace Child Trust Funds with Junior ISAs has backfired in a huge way, as nowhere near the predicted 1.2 million savings products have been taken up by cash-strapped parents.

In the first five months of the new scheme, the Junior ISA scheme has only launched 72,000 tax-free savings accounts designed to provide a nest egg for children as they grow to the age of 18. Determined to be a massive flop by most everyone, this is a stark contrast to the way Child Trust Funds were received back in 2005, when their launch brought a flock of parents to begin saving in order to provide a measure of financial security for their children.

It’s not like parents now care less for their children than they did seven years ago, so why the sudden turnaround? Well, unlike with the massive CTF launch in 2005, which saw that almost 500,000 parents signed up for the scheme in its first three months after the government providing cash vouchers to parents to get the ball rolling, there was no such incentivisation programme for Junior ISAs put into place.

Not only that, but the government has stubbornly refused to allow a single one of the more than five and a half million children with the now-defunct CTFs – which were discontinued in 2010 – to transfer their cash to a Junior ISA. Combined with the rather bleak economic outlook lately, which means that parents are finding themselves with less cash to go around every month to pay the bills, savings for the future has shrunk considerably.

It’s unknown when the government will cease shooting itself in the foot and simply allow CTFs to transfer over into Junior ISAs. Until they do, there’s not likely to be much more Junior ISA take up in the future.

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