JISA Reform FFT Release
Over 1/3 of wider family would set up a Junior ISA on a child’s behalf, but red tape stands in the way
Over a third (36%) of UK adults would set up a Junior ISA (JISA) on behalf of their grandchild, nephew, or niece if JISA rules were relaxed, according to findings from Scottish Friendly’s Family Finance Tracker.
However, as they currently stand, JISA rules prohibit anyone other than a parent or legal guardian from setting up JISAs. That means the wider family has to wait until the parent or legal guardian has set one up first, before they can start contributing.
Scottish Friendly believes that not letting the wider family act on the clear desire to get their grandchild, nephew or niece off to a better financial start in adult life is squandering a vital opportunity to help build early-stage financial resilience. The modern mutual believes that by rewriting the single line in the rules that prohibits wider family from being proactive it would mean many more children could benefit*.
Kevin Brown, savings specialist at Scottish Friendly, explains: “Family life is turned on its head with the arrival of a new baby. As parents and guardians contend with the immediate and pressing priorities of caring for very young children, things like setting up a Junior ISA can get put on the ‘deal with later’ list.
“That is completely understandable, but it is also precisely why it’s so important to remove the barriers to the wider family being able to step in to help when the parents have their hands at their fullest.”
Scottish Friendly says JISAs can provide children with a financial buffer as they enter adulthood – something upon which they could then use to grow long-term financial resilience to help weather whatever life throws at them. The modern mutual argues that 18 years of even small regular contributions to a JISA could provide solid foundations for the child, starting on a firm financial footing as they take on the challenges of life as an adult.
“Losing out on early years of JISA growth is an opportunity missed – it reduces the ultimate size of the financial buffer available to the child. That one line in the rules has unintended consequences that could negatively impact children, who they are set up to help.
“When there is so much that is complex and intractable in financial services, the simplicity of changing that one line to better reflect the realities of modern families is surely a no brainer? Especially when there is such clear demand for it.”
*The Individual Savings Account Regulations 1998 No 1870, Regulation 12a, Clause 4, (b), (i)
Scottish Friendly’s Family Finance Tracker examines the savings and investment habits of 2,600 adults across the UK. The research was conducted by the Centre for Economics and Business Research (Cebr) on behalf of Scottish Friendly.
When asked if current JISA rules were changed to allow other family members aside from the parent or legal guardians to set up a child’s JISA, 36% UK adults said they were ‘likely’ or ‘very likely’ to do so.
For interview requests and photos, please contact Sam Prince in the first instance.
Contact details:
Hilary Morrison
MRM London
07793564351 / [email protected]
Notes to Editor:
About Scottish Friendly
Scottish Friendly is a leading UK mutual life and investments organisation. It provides investors and their families with a wide range of investment and protection solutions and provides life and investment products and services to other financial organisations.
Scottish Friendly has roots stretching back to 1862. Established as the City of Glasgow Friendly Society, its name changed in October 1992 when it took over Scottish Friendly Assurance.
The Group has flourished through a three-part growth strategy of organic growth, mergers and acquisitions, and business process outsourcing.
Scottish Friendly, Galbraith House, 16 Blythswood Square, Glasgow, G2 4HJ
Scottish Friendly Assurance Society Limited. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Scottish Friendly Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority.
Disclaimer
Remember that the value of investments can go down as well as up and you could get back less than you paid in.
Past performance is no guide to future results. Tax treatment depends on individual circumstances which can change in the future.